Custom, Excise & Service Tax Tribunal
M/S Utopia India Pvt. Ltd vs Commissioner Of Service Tax on 25 February, 2011
IN THE ,CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, FKCCI COMPLEX, K.G. ROAD,
BANGALORE 56009.
DATE OF HEARING : 25/02/2011
DATE OF DECISION : 25/02/2011
Service Tax Appeal No. 646 & 647 of 2010
[Arising out of Order-in-Appeal No. 17 & 18/2010 dated 11.01.2010, passed by the Commissioner of Central Excise (Appeals-II), Bangalore)
For approval and signature:
Honble Shri P. Karthikeyan, Member (Technical)
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ? Yes
3. Whether Their Lordships wish to see the fair copy of the Order? Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes
M/s Utopia India Pvt. Ltd. Appellant
Vs.
Commissioner of Service Tax, Respondent
Bangalore.
Present for the Appellant : Shri Anil Kumar, Advocate Present for the Respondent : Shri M. Ravi Rajendran, JDR CORAM : Honble Shri P. Karthikeyan, Member (Technical) ORDER No..Dated 25/02/2011 PER : P. KARTHIKEYAN
These appeals are filed by M/s Utopia India Pvt. Ltd. against the impugned Order-in-Appeal No. 17 & 18/2010 dated 11.01.2010. The appellants were engaged in export of Business Auxiliary Services and Business Support Services. These were data retrieval and migration on behalf of the clients abroad. According to the assessee, it had availed input service falling under the following categories for providing the output services and paid service tax on these services :
(i) Telecom service
(ii) IT service
(iii) Management and maintenance & repair service
(iv) Chartered Accountant service
(v) Manpower recruitment and supply service
(vi) Outdoor catering service
(vii) General insurance service
(viii) Security service
(ix) Technical inspection & certification service
(x) Asset management service As the entire output services of the assessee were exported, the assessee accumulated credit in its account and claimed refund of the same under Rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated 14.3.2006. The original authority allowed credit pertaining to Telecom service, IT service and Management, Maintenance & Repair service. He denied credit relatable to the remaining services. The amounts denied are Rs. 1,20,257/- and Rs. 50,679/- under the Orders-in-Original No. 174/08 dated 30.9.2008 and 11/09 dated 13.1.2009 respectively. Vide the impugned order, relying on the judgment of the Honble Supreme Court in the case of Maruti Suzuki Ltd. [2009 TIOL-94-SC CX], the Commissioner (Appeals) concurred with the original authority and held that the input services were not used in relation to provision of output service.
2. The learned Counsel for the appellants reiterated the arguments taken in the appeals as regards the said services and argued that these services were availed and tax was incurred for provision of the assessees output services. They were legitimately entitled to claim refund of service tax accumulated in their Cenvat account. He relied on various case laws in support of the claim in respect of the input services involved.
3. The learned JDR reiterated the reasoning followed by the lower authorities. It is submitted that justification as regards the entitlement of the said services is advanced first time before the Tribunal and that the lower authorities had rightly passed the impugned orders.
4. I have considered the case records and rival submissions. I find that the Chartered Accountants service involved accounting and auditing of the transactions of the assessee. Auditing and accounting are specifically included in the definition of input service. The learned Counsel relied on the decision of the Tribunal in CST, Delhi Vs. Convergys India Pvt. Ltd. [2009 (16) STR 198 (Del.)]. I find that in the above judgment Tribunal allowed credit of service tax paid on real estate agent service, Chartered Accountants service, asset management service, among others, as input service of the appellant, a call centre.
4.1 As regards the manpower recruitment and supply service, I find that major input of the assessee are skilled manpower, mainly qualified engineers who are engaged in data retrieval. The assessee recruits qualified personnel to render its output service. The learned Counsel has sought to contest the impugned order as regards this service relying on the decision of this Bench in the case of CCE, Hyderabad Vs. Deloitte Tax Services India Pvt. Ltd. [2008 (11) STR 266 (Tri.-Bang.)]. I find that this service is an essential input and the assessee is entitled to credit of the service tax paid. In Deloitte Tax Services India case (supra), the Tribunal had held that the equipment hiring, professional consultation service, recruitment service, security service, telephone service, transport service, training service, facility operation service, courier service, cafeteria service and advertisement service were input for back office services classified under Business Auxiliary Services rendered by the respondents in that case.
4.2 As regards the outdoor catering service provided to the staff of the assessee, the learned Counsel relied on the judgment of the Honble High Court of Bombay in the case of Commissioner of C. Excise, Nagpur Vs. Ultratech Cement Ltd. [2010 (20) S.T.R. 577 (Bom.)]. The assessee provides the service to its staff, but recovers 50% of cost from them. In the Ultratech Cement Ltd. case (supra), the Honble High Court of Bombay had held that once the service tax is borne by the ultimate consumer of the service, namely worker, the manufacturer cannot take credit of that part of service tax which is borne by the consumer. The appellants have submitted an affidavit by the Director of the appellant company to the effect that 50% of the cost towards catering is recovered from the employees. It is accordingly held that the asseessee is entitled to credit of actual service tax incurred by it under this head.
4.3 As regards the general insurance service, it is submitted that this service is availed to insure the assets of the assessee such as computers, equipment, building, etc. and cannot be denied on the basis that insuring the premises and the equipment from which output service is provided is not an activity connected to the business of the appellants. Therefore, the service tax paid under the insurance service for insuring the assets in the premises is an eligible input service. The learned Counsel relies on the decision of this Bench in the case of C.C.E. & C., Guntur Vs. CCL Products (India) Ltd. [2009 (16) S.T.R. 305 (Tri.-Bang.)]. I find that insuring the property and premises of the service provider is an activity related to its business. It is an eligible input service.
4.4 As regards the security services, I find that the assessee employs security staff to guard the premises from where it operates. This is an activity which cannot be dispensed with by the assessee to carry on its activities. Therefore, the tax paid under the head security service qualifies as input service.
4.5 As regards the technical inspection service, the assessee produced documents to show that the performance of the assessee was being assessed by M/s Bureau Veritas Certification India Ltd. to assess its credential to qualify for grading ISO 9001 2000. I find that this certification will enable the assessee to market its services successfully. The service is akin to credit rating covered by the definition of input service in Rule 2 (l) of Cenvat Credit Rules, 2004. This technical inspection certification therefore is an admissible input service for the assessee.
4.6 As regards the asset management service, the assessee had justified its claim before the original authority. The same submissions were also made before the Commissioner (Appeals), but the Commissioner (Appeals) has not given any finding in this regard and rejected the appellants pleas. The assessee relies on the decision in Convergys India Pvt. Ltd. case (supra) wherein the Tribunal held that services of asset management used in connection with procurement of other input services were input services and allowed credit. In the circumstances, the dispute regarding admissibility of tax paid under this head is remanded to the original authority to examine the case afresh after hearing the appellant.
5. The appeals are disposed in the above terms.
(Pronounced and dictated in the open court) (P. Karthikeyan) Member (Technical) /vc/