Custom, Excise & Service Tax Tribunal
M/S Hcl Technologies Ltd vs C.C. & C.E. & S.T. Noida on 10 August, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER
Date of Hearing: 15/07/2015
Date of Pronouncement: 10/08/2015
Appeal No. ST/56739/2013-ST(SM)
(Arising out of OIA No.328/ST/APPL/NOIDA/2012 dated 29.09.2012 passed by Commissioner (Appeal) Customs & Central Excise, Noida)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s HCL Technologies Ltd. Appellant
Vs.
C.C. & C.E. & S.T. Noida Respondent
Appearance:
Present for the Appellant: Ms. Sukriti Das, Advocate Present for the Respondent: Shri R.K. Gupta, DR Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial) Final Order No. 52488/2015 Per: Sulekha Beevi C.S. The appellants are aggrieved by the rejection of refund claim of Cenvat Credit.
2. The appellants are engaged in providing Business Auxiliary Service to their overseas clients. They are also availing Cenvat Credit of Service Tax paid on input services used for exporting BAS Services. The appellants filed refund claim of Rs.2,44,78,648/- for the period October 2010 to December 2010. A Show Cause Notice was issued proposing to disallow claim of Rs.54,84,068/- which finalized by the order passed confirming the disallowance of refund claim. Aggrieved the appellants approached the first appellate authority who allowed part of the claim and rejected the refund claim of Rs.7,52,975/-. Hence this appeal.
3. At the outset is has to be stated that on behalf of the appellants it was submitted that claim of an amount of Rs.4381/- as per invoices at Serial No. 23, 24 & 25 of Annexure-2 is withdrawn and the relief sought in this appeal is confined to Rs.7,48,594/- only.
4. The learned Counsel for appellants urged that the refund has been wrongly denied. The disputed period is from October 2010 to December 2010. Cenvat credit of Rs.76,463/- on Rent-a-Cab services has been denied stating the reason that the same has no nexus with the provision of output services. It is seen observed by the authorities below that Rent-a-Cab and tour operator were used by a particular person/guest though on a regular basis and that vehicles are used in the night also. The learned counsel, Ms. Sukriti Das, appearing for the appellants explained that appellants are a BPO Company and these services are utilized for the purposes of transportation of its employees to and from the workplace and their homes and also for business meetings. Further, that for the safety of lady employees the vehicles are used and plied in the night also. The appellants being a BPO Company the odd working hours and transportation employees, especially the lady employees is a service necessary and indispensable for the activities in which the Company is engaged. The amendment brought forth in the definition of input services w.e.f. 1.4.2011 excludes Rent-a-Cab services. But the department vide Circular No. 943/04/2011-CX dated 29.4.2011 has clarified that the credit on such services shall be available if its provision had been completed before 1.4.2011. According to the appellants the credit was availed for the period October 2010 to December 2010. They also relied upon the judgments rendered in CCE, Bangalore Vs. Bell Ceramics 2012 (25) STR 428 (Kar), CCE, Bangalore Vs. Stanzen Toyotetsu India (P) Ltd 2011 (23) STR 444 (Kar.) and KPMG Vs. CCE, New Delhi 2014 (33) STR 96 (Tri.-Del.). The learned DR reiterated the findings in the impugned order and contented that credit cannot be availed as these services have no nexus with the output services. On hearing the submissions and perusal of records, the instant case stands covered by the decisions rendered in the above judgments which are held in favour of the assessee. The requirement for availing credit is that the input service must be used for providing the output service. The appellants being a BPO, where the employees have to work in shifts even during night hours, I cannot agree with the view of the authorities below that the such services have no nexus with the out put services provided. The refund on these services is allowed.
5. The credit of service tax on Courier Service has been denied for the reason that these were used for dispatch within India where as appellant is engaged in export of services. That therefore these services has no nexus with the output services. The appellants submitted that courier services are used for dispatch of the appellants documents to various offices, units etc. which are necessary for running the day to day business of the appellant. The important documents have to reach the destination in time for which it is not possible to hand deliver them, and that these services are extremely necessary for the business of the appellant. They also relied upon the judgments rendered in CCE, Vapi Vs. Apar Industries 2010 (20) S.T.R. 624 (Tri.-Ahmd.) which was affirmed in Commissioner Vs. Apar Industries 2011 (23) S.T.R. J194 (Guj.). The learned DR defended the impugned order stating that the services being used within the country are not available for credit as the appellants are engaged in export of services. To carry out the domain activity of exports, the appellants may require to send documents and such other to Offices, units within the country. Merely because the courier service was utilized within the country it cannot be assumed that the services does not have nexus with output services. The principle laid in the above case laws are also squarely applicable to the instant case. Further there is no dispute that these input services were received by the appellant. I hold that the appellants are eligible for refund of Rs.6,670/- towards service tax paid on courier services.
6. Refund for Management, Maintenance & Repair Service was denied for the reason that such services were used for painting and mica finishing work and that these services do not have nexus with the provision of output service. In CCE & ST Vs. Lupin Ltd. 2012 (28) S.T.R. 291 (Tri.-Mum.), LOreal India Pvt. Ltd. Vs. CCE, Pune-I 2011 (22) S.T.R. 89 (Tri.) and Delta Energy Systems Pvt. Ltd. Vs. CCE, Delhi-III 2013 (31) S.T.R. 684 (Tri.- Del.) it has been categorically held that such services qualify as input services. The expression activities relating to business used in the inclusive part of the definition of input service has been given the widest import by judicial pronouncements. It has been held that what needs to be seen is whether the said service can be considered to be an activity relating to business rather than testing whether it is used in manufacture or for providing output service. The service in question, according to appellants was received for maintaining its business premises from where the activities of output service are carried out. Following the ratio laid in the above judgments I find that appellants are entitled to credit of Rs.37,048/- for Management, Maintenance & Repair Service.
7. The Commissioner (Appeals) has disallowed credit of Rs.91,958/- on Manpower Recruitment Services on the view that these services have no nexus with the provision of output services. That the absence of such services would not affect the provision of output service. The appellants contended that the appellant received services from various service providers, who provide support staff and nurses to the appellant on temporary basis. Such services have integral nexus with providing output services. They also relied on the decisions rendered in CCE & ST Vs. Lupin Ltd. 2012 (28) S.T.R. 291 (Tri.-Mum) and Utopia India Pvt. Ltd. Vs. Commissioner of Service Tax 2011 (23) S.T.R. 25 (Tri.-Bang.). Recruitment and quality control is specifically mentioned as a service in the inclusive part of the definition of input services under activities related to business. The appellant has availed the services of man-power recruitment and supply agencys service for hiring nurses for its employees and also for hiring administrative and support staff which is required for carrying out its day to day business activities. Therefore I find that the denial of refund on Manpower Recruitment Service, is unjustified. The same has to be allowed.
8. The claim of Rs.37,548/- on Security Agency Services has been rejected for the reason that it has no nexus with output service. The appellants contended that the issue is covered by the judgments in Utopia India Pvt. Ltd. Vs. Commissioner of Service Tax 2011 (23) STR 25 (Tri.-Bang.). According to appellants being a Call Centre and BPO, their employees have to work and also leave office at odd hours. The security service was used to provide safety to employees. The Commissioner (Appeals) has rejected the claim holding that the invoices show security guard for pickup and drop of employees and has no nexus with output service. Applying the ratio laid in the above judgment I am of the view that appellants are entitled to credit/refund on these services.
9. The learned DR vehemently contended that refund/credit is not admissible for cleaning services. According to him some of the invoices show for cleaning work done of the guest house premises of the appellant. The appellants counsel submitted that these guest houses are being maintained for use by employees of the appellants who travel from one place to another for business purposes. The decisions in CCE & ST Vs. Lupin Ltd 2012 (28) STR 291 (Tri.-Mum) and Paper Products Vs. CCE, Mumbai-III 2013 (30) STR 310 (Tri.-Mum.) have held the issue in favour of the assessee. Applying the ratio laid in these decisions, I find that the denial of credit for these services is incorrect.
10. The authorities below have denied the credit of Rs.52,413/- on service tax paid on Renting of immovable property. The adjudicating authority has rejected the claim on the ground that these are utilized for stay in hotel and have no nexus with output service. The appellants have claimed credit on service tax paid for stay in hotel as renting of hotel/renting of immovable property. That rooms were availed by employees to stay for business activities. The appellants have claimed credit of tax paid by persons for stay in hotels on the guise of the heading Renting of Immovable Property. Therefore the denial of credit/refund on these services, in my opinion is correct and therefore sustained.
11. The appellants supplied coffee mugs bearing the logo of the appellant Company and has claimed Rs.753/- towards these services naming it as Design services. It is not shown by the appellants as to why these mugs were supplied or the category of persons to whom these mugs were supplied. I fail to understand how these would qualify as input service related directly or indirectly to the output service. The Commissioner (Appeals) has rightly rejected the claim of refund which calls for no interference.
12. An amount of Rs.8240/- claimed towards service tax paid on Business Support Services was denied. According to appellant summits were conducted in which helped them improve their cliental. That such Summits helps the Company to meet potential clients and promote its business and gain knowledge. I cannot differ with the submissions made by the learned advocate for the appellants as such summits do help the Company to promote and develop its business. The credit and refund denied on these services in my view, is unjustified. The same is allowed.
13. The appellants were denied refund of Rs.6,180/- on Legal Consultancy Services holding that these services have no nexus with the output services. Appellants submitted that the service was utilized for drafting reply and appeal papers. The First appellate authority has held that to file an appeal is not a mandatory requirement under law and therefore has no nexus with the output service. The rejection of claim on the ground that filing of appeal or reply is not mandatory requirement is baseless. Legal consultancy services are indispensable for any business to satisfy proper compliance of legal its requirements. Therefore I hold appellants are eligible for refund of credit on these services.
14. Both the authorities below have taken the view that Chartered Accountancy Services do not qualify as input services. On behalf of the appellants it is submitted that these services were utilized for compliance of industrial and Labour Laws and also for statutory compliances under Income Tax Act, 1961 and Companies Act, 1956, and for services availed for filing of refund claims. The definition of input services during the relevant period was very wide so as to include all activities relating to business. I am of the view that appellants are entitled to refund claimed for these services.
15. The impugned order denied input service credit of Rs.1,69,346/- on the ground that the invoices did not contain PAN based service tax registration number of the service provider or the name and address of consignee is not proper or the address mentioned is not registered with the service tax department. Accordingly to the appellants, it is only a procedural irregularity and that substantive benefit should not be denied on procedural lapses. Against this the learned DR vehemently argued that to claim benefit, the conditions granting such benefit has to be strictly followed. That the purpose of such conditions is to verify the details and to check that the facility of Canvat Credit is not mis-utilized. The learned Counsel for appellants relied on the decisions reported in Modi Xerox Financial Service Ltd. Vs. CCE, Coimbatore 2005 (191) ELT 457 (Tri.), CCE, Delhi-III Vs. Myron Electricals (P) Ltd. 2007 (207) ELT 664 (P&H), Sanghi Industries Vs. CCE, Rajkot 2009 (14) STR 462 (Tri.-Ahmd.) Agarwal Industries Ltd. Vs. CCE, Kanpur, 2008 (12) STR 223 (Tri.), CCE, Chandigarh Vs. Stelco Strips Ltd. 2010 (255) ELT 397 (P&H). It is not disputed that tax was paid for the services utilized; so also there is no dispute that the services were utilized in the taxable output services. These invoices pertain to C & F Agents Service, Management, and Maintenance and repair service, cleaning Service, Manpower Recruitment Service, Security Service Telecommunications Service and Renting of Immovable Property. Out of these Renting of Immovable Property (Rs.52,413/-) has already been held to be not eligible in the preceding paragraphs. Therefore the same requires no further consideration. The other services, except telecommunication services (Rs.193/-) have been found eligible as input services either by the authorities below or in the Preceding Paragraphs. But the authorities below have grouped together the invoices which were defective for the reason of not containing PAN based Service Tax Registration or Service Tax Registration and discussed the claim pertaining to these invoices under separate head. The appellants submit that the invoices issued by Ritzy Securities & Consultants Ltd. (Security Services) contain the PAN and Service Tax No., and therefore denial of claim on this ground is incorrect. Further in the case of some invoices which did not contain the Registration No. of service provider, the appellant has cured the defect by providing the details as Annexure 21. It is also their case that the allegation in SCN was with regard denial of credit was for only three invoices. It has been settled in a catena of decisions that non-mentioning of registration number of the service provider is only a procedural lapse and Credit cannot be denied on account of procedural lapse when substantive entitlement itself is not disputed. Further, the proviso to sub clause (2) of Rule 9 of Cenvat Credit Rules, provide that if documents do not contain full particulars the DC/AC has powers to condone the defects after satisfying whether properly accounted. In view thereof, the rejection of claim for the defects alleged in invoices is incorrect. The claim of credit on disputed invoices for those services which are eligible as input services are allowed.
16. From the above discussions, the refund claim for Rent-a-Cab Services, Courier Services, Management, Maintenance & Repair Service, Manpower Recruitment Service, Security Services, Cleaning Services, BSS Services (Summit), Legal Consultancy Services, Chartered Accountancy Services, are allowed. The refund claim on improper/defect invoices pertaining to services other than Telecommunication Services and Renting of immovable property are allowed.
The appeal is partly allowed.
(Pronounced on 10.08.2015) (Sulekha Beevi C.S.) Member (Judicial) K. Gupta 11