Custom, Excise & Service Tax Tribunal
Cst Bangalore vs M/S. Juniper Networks India Pvt Ltd on 29 January, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20114-20115 / 2014 Appeal(s) Involved: ST/182/2009-SM, ST/187/2009-SM [Arising out of Order in Appeal No.292/2008 dated 28/11/2008 passed by the Commissioner of Central Excise (Appeals-II), Bangalore.] CST BANGALORE NO. 16/1, S.P. COMPLEX, LALBAGH ROAD, BANGALORE. Appellant(s) M/s. JUNIPER NETWORKS INDIA PVT LTD PLOT NO.66/1, 3RD AND 4TH FLOOR, BAGAMANE TECH PARK, C.V.RAMAN NAGAR, BANGALORE Appellant(s) Versus CST BANGALORE NO. 16/1, S.P. COMPLEX, LALBAGH ROAD, BANGALORE. M/s. JUNIPER NETWORKS INDIA PVT LTD PLOT NO.66/1, 3RD AND 4TH FLOOR, BAGAMANE TECH PARK, C.V.RAMAN NAGAR, BANGALORE Respondent(s)
Appearance:
Mr. N. R. Badrinath, CA M/s. Singhvi, Dev & Unni, CAs 6th Floor, Trade Centre # 29/4, Race Course Road, Bangalore 560 001.
For the Assessee Mr. S. Teli, Dy. Commissioner (AR) For the Revenue CORAM:
SHRI B.S.V. MURTHY, HONBLE MEMBER (TECHNICAL) Date of Hearing: 29/01/2014 Date of Decision: 29/01/2014 Order Per : B.S.V MURTHY Assessee is engaged in software development and IT enabled service. They filed refund claim for refund of unutilized CENVAT credit of service tax paid on several input services amounting to Rs.17,74,476/- under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.5/2006-CE NT dated 14.3.2006. Refund in respect of certain services were allowed by original authority and in respect of some more services, appellate authority allowed the refund claim and certain portion of the refund claim, the assessee themselves felt they would not claim and in respect of the amount disallowed by the appellate authority and not accepted as inadmissible is the matter of dispute before me is the appeal filed by the assessee. Revenue is also in appeal on the ground that the Commissioner (A) did not restrict the refund claim proportionate to the exports.
2. Heard both the sides. It is seen that out of total refund claim amount of Rs.17,74,476/-, an amount of Rs.6,15,694/- has been allowed (the Commissioner (A) had not quantified the refund admissible in respect of credits allowed by him and figure given is based on the figures given by the learned Chartered Accountant during the hearing). The assessee themselves have accepted and are not in appeal against disallowance of an amount of Rs.3,64,986/-. The balance remaining which is in dispute is Rs.6,56,184/-.
3. The learned Chartered Accountant has given the details of services, nature of utilization of the same and precedent decision in which it has been held that credit is admissible in the form of a table. On going through the table, I find that the claim made by the assessee is correct. The name of the service, brief details of nature of utilization and the precedent decision which covers the issue in favour of the assessee are given in the table below:
Sl. No. Category of services Nexus of Input Services Case Laws 1 Management Consultants Services These comprise of statutory compliance, finance related activities and project management related services. These services are critical input services without which it is not possible to carry on business. Therefore, these services qualify as input services. Commissioner of Central Excise., Hyderabad - IV vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri. - Bang) 2 Practicing Chartered Accountant Services Service includes the audit, compliance and attested functions. These services are integral for conduct of business and hence would qualify as 'input services'. C . Cubed Solutions Private Limited vs. Commissioner C. EX., Bangalore 2013 (293) E.L.T 398( Tri - Bang) 3 Erection, Commissioning & Installation Services Service consists of wiring and cabling of electrical items for internet connection. This is essential for providing IT and ITES Service without which output services cannot be rendered and communication with the customers would not be possible. Therefore, these services would qualify as input services. Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) 4 Real Estate Agents Services Brokerage Charges paid to real estate agent with respect to finalization of building (office premises) agreement between appellant and owner of the property. Premises, being an integral requirement for conduct of business, the services in connection with the same would qualify as 'input services'. Commissioner of Central Excise., Hyderabad - IV vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri. - Bang) Sl. No. Category of services Nexus of Input Services Case Laws 5 Outdoor Catering Services The appellant renders services to its client located outside the country, working in different time zones to cater to the needs of the client. The services are provided round the clock and employees are required to work on shift basis. In this backdrop, it becomes an essential requirement to provide food and beverages for the employees at appropriate times. Therefore, the Appellant has engaged the services of a catering agency to provide the same. The same being an integral part of the business activities, it would qualify as input services. Commissioner of Central Excise., Hyderabad - IV vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri. - Bang) and Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) 6 Telephone and Telegraph Services These services are used for conference calls, telephones, bridge services for connecting conference calls worldwide. Therefore, these services are critical to provide output service and without which the Appellant would not be able to communicate / contact the customers. Accordingly, this being an integral requirement for conduct of business, it would qualify as 'input services'. M/s Kijiji (India) Pvt. Ltd vs. Commissioner of Central Excise, Mumbai I-2012-TIOL-1854-CESTAT-MUM 7 Rent a cab services The appellant provides services to the group Companies located across the globe in different countries. Due to difference between the time zones of these countries, the services are provided round the clock. The appellant hires cabs for picking its employees from their residence and drop them back in the absence of public transport facilities to the employees. Therefore, rent-a-cab is a very essential service and critical input service to the business without which it is not possible for the appellant to carry on the business.
Further, in terms of provision of Section 25 of the Karnataka Shop and Commercial Establishment Act, 1961, which provides that any establishment engaging women for night shift on the job requires the establishment to provide facilities of transportation and security of such women employees? Therefore, rent-a-cab service is critical input for the running of the business and qualifies as input services. Glyph International Ltd. Vs. Commissioner of Central Excise, Noida-2013 (12) TMI 1375 - CESTAT NEW DELHI and Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) 8 Mandap Keeper Services The mandap keeper services was used for conducting an event for employees as part of the employee welfare activities which is an important ingredient to control attrition in the IT / ITES industry. M/s Kijiji (India) Pvt. Ltd Vs. Commissioner of Central Excise, Mumbai I-2012-TIOL-1854-CESTAT-MUM 9 Cleaning Services It is important that the office premises from where the output services are provided are maintained in a clean and hygienic manner so that the employees can perform the job efficiently. Therefore it is critical for business and qualifies as input services C . Cubed Solutions Private Limited vs. Commissioner C. EX., Bangalore 2013 (293) E.L.T 398( Tri - Bang) Sl. No. Category of services Nexus of Input Services Case Laws 10 Consulting Engineering Services In various circumstances, the Appellant engages of third party professionals to seek advice / consulting in the field of engineering activities. These services were with respect to professional services and manpower support which is actively and directly used in providing the output services to clients. Hence, this has a direct nexus with the provision of export services and therefore, the same qualifies as input services Commissioner of Central Excise., Hyderabad - IV Vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri. - Bang) and Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) 11 Design Services Design services includes provision of system software and layout design. This is an essential service which is required to make systems work effectively and efficiently and it is essential for rendering the output services. Therefore it is critical for business and would qualify as input services. M/s Kijiji (India) Pvt. Ltd Vs. Commissioner of Central Excise, Mumbai I-2012-TIOL-1854-CESTAT-MUM 12 Event Management Services This expenditure is incurred to hold conference for a dual purpose of discussing business plans and as an employee welfare activity. Therefore, the same would qualify as input services Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) 13 Architects These services have been incorrectly classified as 'architect services'. The appropriate classification is 'consulting engineering services'. It represents design services with respect to products designing. The service is essential for proper designing of work which is essential for rendering services. Therefore it is critical for business and qualifies as input services. M/s Kijiji (India) Pvt. Ltd Vs. Commissioner of Central Excise, Mumbai I-2012-TIOL-1854-CESTAT-MUM 14 Business Auxiliary Services These services includes payroll processing and statutory compliances and these are essential for conduct of the business and would qualify as input services Commissioner of Central Excise., Hyderabad - IV Vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri. - Bang)
4. From the above, it is quite clear that the appellant is eligible for the benefit of refund in respect of all the services in dispute and therefore appeal is allowed and the matter is remanded to the original adjudicating authority for considering the refund claim in accordance with law as regards other aspects except the eligibility in respect of the services.
4.1 As regards appeal filed by the Revenue, it was submitted by the learned Chartered Accountant that the amount claimed is in accordance with the Notification which requires refund to be sanctioned on the basis of proportion of exports to the total turnover only. However, since the matter is remanded to the original refund sanctioning authority, he can verify whether this claim is correct or not.
5. Both the appeals are decided on above terms.
(Order dictated and pronounced in open court) B.S.V MURTHY TECHNICAL MEMBER rv 5