Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax, Mumbai vs M/S. Msim Global Support & Technology ... on 13 February, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. ST/89795/13-MUM Application No. ST/MA/ORS/92066/15-MUM [Arising out of Order-in- Appeal No. 363/BPS/MUM2013 dtd. 24/9/2013 passed by the Commissioner of Central Excise & Service Tax(Appeals), Mumbai- IV] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should 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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
=======================================================
Commissioner of Service Tax, Mumbai
:
Appellant
VS
M/s. MSIM Global Support & Technology Services Pvt. Ltd.
:
Respondent
Appearance
Shri. A.B. Kulgod, Asst. Commissioner(A.R.) for the Appellants
Shri. Prashant Paranjape, Advocate for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 13/2/2015
Date of decision: 13/2/2015
ORDER NO.
Per : Ramesh Nair
This appeal is directed against Order-in- Appeal No. 363/BPS/MUM/2013 dtd. 24/9/2013 passed by the Commissioner of Central Excise & Service Tax(Appeals), Mumbai- IV, wherein the Ld. Commissioner (Appeals) set aside the order-in-original No. ST-II/Div. IV/130-R/2012-13 dated 28/9/2012 and allowed the appeal of the Respondent. Respondent also filed Misc. Application for implementation of the said order. In the same matter the stay application of Revenue was rejected vide this Tribunal order No. S/493/14/SMB/C-III dated 5/5/2014. The fact of the case is that the respondent M/s. MSIM Global Support & Technology Services Pvt. Ltd is providing taxable service under the category of Business Support Service and Management, Maintenance & Repair Service. They had claimed refund of the unutilized Cenvat Credit of Rs. 36,61,517/- for the period from July 2011 to September 2011 under Rule 5 of the Cenvat Credit Rules, 2004 read with notification No. 5/2006- CE(NT) dated 14/3/2006 on the ground that the output services provided during relevant period under the category of Business Support Services had been exported and they were not in position to utilized the Cenvat Credit of service tax paid on the input services used for providing such output services. The respondent was issued show cause notice dated 24/8/2012, rejected refund claim on the ground that the respondent could not satisfy that the services on which refund has been claimed have actually gone into consumption of output services exported during the claim period in the light of judgment of Honble CESTAT Bangalore in the case of M/s. KBASE Tech Pvt. Ltd. Vs. CCE & ST[2010(18) STR 28 (Tri- Bang)]. Being aggrieved, the respondent filed appeal before the Commissioner (Appeals) who after examining in detail held that all the services are covered within the definition of input services under Rule 2(l)(i) and same were used for providing out put services which has been exempted. Accordingly, the appeal filed by the respondent is allowed with consequential relief. Aggrieved by the impugned order the Revenue is before me.
2. Shri. A.B. Kulgod, Ld. Asst. Commissioner(A.R.) appearing on behalf of Revenue in context of Misc. Application filed by Respondent for implementation of the stay order dated 5/5/2014 submits that refund claimed by respondent has been processed for sanction. As regard Revenues appeal, Ld. A.R., Shri Kulgod submits that respondent did not satisfy to the lower adjudicating authority about the nexus between input service and export service. He submit that the respondent also failed to establish that input service against which refund claim was made has been consumed in the export service, therefore the order passed by the Ld. Commissioner(Appeals) is not proper and legal and the same deserve to be set aside and original order to be upheld.
3. Shri. Prashant Paranjape, Ld. Counsel for the respondent submits that the similar issue in the respondents own case earlier came before this Honble Tribunal wherein Division Bench of this Tribunal in the case of Margan Stanley Advantage Services Ltd. Vs. Commissioner of Service Tax Mumbai-II[2014-TIOL-2289-CESTAT-MUM] allowed the appeal by way of remand and the Revenues appeal was dismissed. He submits that in view of the said judgment in their own case, the dispute raised on the impugned order has been settled. Therefore the Revenues appeal in not maintainable and deserve to be dismissed.
4. I have carefully considered the submissions made by both the sides.
5. On going through the judgment of this Tribunal in the respondents own case I find that in the said case it was held as under:
5. As regards the rejection of the refund claim amounting to Rs. 1.02 crore the objection was mainly in respect of the FIRCs mentioning that 'the proceeds have been realised in respect of export of goods'. Meanwhile, the said certificates have been corrected by the collecting bank and therefore, this objection would no longer be sustainable. However, the correct certificates were not available before the lower authorities when they rejected the claim and, therefore, the matter is remanded back to the refund sanctioning authority for consideration of the revised FIRCs now obtained by the assessee-appellant from the collecting bank and after considering the same, refund shall be granted to the appellant as per law.
6. As regards the appeals of the Revenue, the only ground urged is on the use of the expression "in" which has been retrospectively amended by substitution of expression "for". The expression "for" implies 'for the purposes of' as held by the hon'ble apex Court in the case of Indian Chamber of Commerce [AIR 1976 SC 348] of output service, refund of input service credit would be available. In any case, the department has not objected to the assessee-respondent taking the credit at the relevant time and the objection has been raised only at the time of filing of the refund claims. This Tribunal, in the case of Commissioner of Service Tax, Delhi vs. Convergys India Pvt. Ltd. 2009 (16) STR 198 (Tri-Del.) = 2009-TIOL-888-CESTAT-DELhad taken the view that there cannot be two yardsticks, one for allowing the input credit and another for refund of the credit taken. The Tribunal observed in the said case that there cannot be two different yardsticks; one for permitting the credit and the other eligibility for granting credit. Whatever credit has been permitted to be taken, the same are permitted to be utilized and it is not possible to have two provisions, one for grant of refund or as rebate. Without questioning the credit taken, the eligibility to refund cannot be questioned. The above ratio squarely applied to the facts of the present case. On this ground also the appeals filed by the Revenue fails and sanction of refund to the assessee-respondent cannot be disputed.
7. Thus, the appeals filed by the assessee M/s. Morgan Stanley Advantage Services Ltd. are allowed by way of remand and the appeals filed by the Revenue are dismissed as devoid of merits. The miscellaneous applications are also disposed of.
8. Since the refund amount pertains to the year 2007 and 2008 onwards, the refund sanctioning authority is directed to dispose of the refund claims within a period of one month from the date of receipt of this order.
In the above judgment it was held by the Division Bench of this Tribunal that there can not be two yardsticks that in one hand availability of Cenvat credit is not under dispute but for granting the refund dispute was raised. I find that the ratio of the above judgment directly applicable in the present case. I also observe that the Ld. Commissioner(Appeals) has considered the whole issue in detail and finding given is as under:
I find that the Appellants have been availing CENVAT credit of service tax paid on a host of input services as listed below:-
(i) Banking & Financial
(ii) Courier Service
(iii) Commercial Training & Coaching
(iv) Management or Business Consultant
(v) Management, Maintenance & Repair
(vi) Online information & database Access
(vii) Security Agency
(viii) Manpower Recruitment Agency
(ix) Business Support Services-Payroll Processing
(x) Travel Agents
(xi) Chartered Accountant and
(xii) Information Technology Software Services
16. All the above mentioned services shall be covered within the definition of an input service under Rule 2(I)(i) (main definition), if they are used in providing any output service. However, by virtue of the inclusive definition, as referred to supra, these service shall continue to be within the ambit of input service if they are used:
> In relation to setting up, modernization, renovation or repair of a factory, premises of provider of output service or an office relating to such factory or premises;
> In relation to advertisement or sales promotion, market research;
> In relation to storage up to the place of removal;
> In relation to procurement of inputs;
> In relation to activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, > In relation to inward transportation of inputs or capital goods and outward transportation up to the place of removal
17. It is worthwhile to note that, out of the input serives as mentioned in the foregoing para, there seems to be no dispute regarding admissibility of CENVAT Credit of service tax paid on the said services as also recorded by the respondent in the impugned orders except for the fact that it was not considered as input service, as there was allegedly no direction nexus with output service provided by the Appellants.
18. It is admitted fact that the Appellants are engaged in providing taxable output services of the category Business Support Services. Therefore, any service which is used for providing the said output service should qualify to become input service and CENVAT credit of the service tax, if any paid on such input service would be admissible. The facility of CENVAT Credit of service tax paid on any other service, may not be denied merely because it is used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of out service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal. The appellants contention is that the disputed services, in question were used in relation to their business activity. Hence, these services too were converted within the ambit of input service by virtue of inclusive definition appended below Rule 2(I)(ii) of CENVAT Credit Rules, 2004 and CENVAT Credit of the service tax paid thereon was legally available to them which was rightly availed by them for provision of the output services exported by them.
19. It may be seen that Rule 5 of the CENVAT Credit Rules, 2004 lays down that Where nay input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT Credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of-
(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or
(ii) service tax on output service,
20. Notification NO. 5/2006-CE(NT) dated 14/3/2006, as amended, issued under Rule 5 of Cenvat Credit Rules, 2004, vide para No. 4 states that the refund is allowed only in those circumstances where a manufacturer is not in a position to utilize the input credit or input service credit, allowed under rule 3 of the said rules, against goods and taxable services exported during the quarter of month to which the claim relates(hereinafter referred to as the given period) Further, condition no. 5 of the said notification further lays down that The refund of unutilized input service credit will be restricted to the extent of the ratio of export turnover to the total turnover for the given period to which the claim relates i.e. Maximum refund=Total CENVAT credit taken on input services during the given period X export turnover=Total turnover.
21. Further, it is to be noted that the Board vide their Circular NO. 120/01/2010 dated 19/1/2010 have clarified that the primary objection indicated by the field formations is that the language of Notification No. 5/2006-CX(NT) permits refund only for such services that are used in providing output services. In other words, the view being taken is that to be eligible for refund, input services should be directly used in the output service exported. As regard the extent of nexus between the inputs/input services and the export goods/services, it must be born in the mind that the purpose is to refund the credit that has already been taken. There cannot be different yardsticks for establishing the nexus for taking of credit and for refund of credit. even if different phrases are used under different rules of CENVAT Credit Rules, they have to be construed in a harmonious manner. To elaborate, the definition of input services for manufacturer of goods, as given in Rule 2 (I)(ii) of CENVAT Credit Rules, 2004, includes within its ambit all services used in or in relation to the manufacture of final products and includes services used directly or indirectly. Similarly Rule 2(I)(i) of CENVAT Credit Rules also gives wide scope to the input services for provider of output services by including in its ambit services used.for providing an output service. Similar is the case for inputs. Therefore, the phrase, used in mentioned in Notification No. 5/2006-CX(NT) to show the nexus also needs to be interpreted in a harmonious manner. The following test can been used to see whether sufficient nexus exists. In case the absence of such input/input service adversely impacts the quality and efficiency of the provision of service exported, it should be considered as eligible input or input service. In the case of BPOs/call centres, the services directly relatable to their export business are renting of premises; right to use software; maintenance and repair of equipment; telecommunication facilities; etc. Further, in the instant example, services like outdoor catering or rent-a-cab pick up and dropping of its employees to office would also be eligible for credit on account of the fact that these offices run on 24X7 basis and transportation and provision of food to the employees are necessary pre-requisites which the employer has to provide to its employees to ensure that output service is provided efficiently. Similarly, since BPOs/Call Centres require a large manpower, service tax paid on manpower recruitment agency would also be eligible both for taking the credit and the refund thereof. On the other hand, activities like event management, such as company-sponsored dinners/picnics/tours, flower arrangements, mandap keepers, hydrant sprinkler systems(that is, services which can be called as recreational or used for beautification of premises) rest house etc., prima facie would not appear to impact the efficiency in providing the output services, unless adequate justification is shown regarding their need.
22. From the correlation of the input services used in the provision of output services as seen from the Appellants submissions before the Respondent, I find that the input services were essential for their business activity in the provision of output services. I, therefore, hold that aforementioned disputed services were used by the Appellants in or in relation to provision of output services. In other words these services could be said to have been used in furthering business prospects of the Appellants, though they may not be having direct nexus with the provision of output services exported. Reliance in this regard is also placed upon Honble CESTATs decision in following cases:-
(i) CCE, Tirunelveli V/s. DCW Ltd. 2011-TIOL-606-CESTAT Mad. Wherein it is held that the assessee is eligible to credit of service tax paid on air travel fare, if the air travel has been performed for the company business.
(ii) CCE(LTU), Chennai Vs. Turbo Energy Ltd. -2010-TIOL-1310 CESTAT Mad wherein it is held that the credit of tax paid on air/rail ticket bookings has been held to be admissible, and also credit availed on insurance services was held admissible.
(iii) Heartland Bangalore Transcription Ser. (P) Ltd. Vs. CST, Bangalore-2011(21) STR 430(Tri. Ban)- wherein it is held that The assessee is eligible to credit of service tax paid on Maintenance and Repairs services as maintenance is necessary for provision of service of the assessee and thus assessee is entitled to credit of service tax paid as input service;
Manpower recruitment and Agency services are admissible input service.
(iv) Utopita India pvt. Ltd. Vs. CST, Bangalore 2011(23) STR 25 (Tri. Bang.) wherein it was held that Manpower Recruitment and Agency services are essential input and assessee in entitled to credit of the service tax paid
(v) CCE & Cus, Vapi Vs. Apar Industries Ltd. -2010(20) STR 624(Tri. Ahmd.) wherein it was held that-
Courier services were used in relation to manufacture and clearance of final product as well as business activities-They were input services for which assessee was entitled to credit of Service Tax paid on them and also approved by the Gujarat High Court in 2011(23) STR J194.
(vi) Rohit Surfactants Pvt. Ltd vs. CCE, Bhopal, 2009(240) ELT 472(Tri-Del.) wherein it is held that Credit of tax paid on courier services has been held to be admissible.
23. In view of the foregoing, the impugned order is set aside as the same is found not sustainable in law. Accordingly, I order for setting aside the impugned order.
24. I accordingly, allow the subject appeal with its consequential reliefs, if any, as per law to the Appellants.
25. The subject appeal is disposed of in above terms.
I find that the Ld. Commissioner(Appeals) have considered the issue in detail and given findings which is found to be absolutely correct and legal and same does not require any interference. In view of the above position, I set upheld the impugned order, and dismissed the Revenues appeal.
(Operative part pronounced in court) Ramesh Nair Member (Judicial)) sk 2