Custom, Excise & Service Tax Tribunal
M/S Xilinx(I) Technology Services ... vs The Commissioner on 1 February, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench Single Member Bench
Court I
Appeal No.ST/1957 to 1959/2012
(Arising out of Order-in-Appeal No.68,69 &70/2012(HYD-IV)S.Tax, dated 27-03-2012 passed by Commissioner of C&.CE(Appeals-II) Hyderabad)
For approval and signature:
Honble Ms. Sulekha Beevi, C.S. Member(Judicial)
1.
Whether Press Reporters may be allowed to see 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 Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
M/s Xilinx(I) Technology Services Pvt.Ltd.. .
..Appellant(s)
Vs.
The Commissioner.
C,C.E&ST, Hyderabad-IV
..Respondent(s)
Appearance
Shri S.Thirumalai, Advocate for the Appellant
Shri Ashok.K.Kulgod, AR for the Respondent
Coram:
Honble Ms. Sulekha Beevi, Member(Judicial)
Date of Hearing : 01/02/2016 Date of decision: 01/02/2016
FINAL ORDER No._______________________
[Order per: Sulekha Beevi, C.S.]
1. The issues involved in the above appeals being the same, they were heard together and are disposed by this common order .
2. The appellants are engaged in providing software services which are exported. They are 100% EOU registered with Software Technology Parks of India(STPI) Scheme and also have service tax registration under the category of Information Technology Software Services(ITSS). The appellants are aggrieved by the denial of refund of the service tax paid on input service. The period involved in Appeal No.ST/1957/2012 is from April, 2009 to May, 2009, the period involved in Appeal No.ST/1958/2012is from June, 2009 to Nov. 2009 and in Appeal No.ST/1959/2012 the period involved is Dec. 2009 April to June, 2010 and July to Sept. 2010. The main ground on which the credit /refund is denied is that the input services do not have nexus with the output services. The denial of refund pertaining to the three different appeals and the details of services as tabulated by the learned counsel appearing for appellant are shown in the tables below:
ST/1957/2012
Category of input service
April, 2009
May,2009
Total
Business Auxiliary Services
88,678
-
88,678 Business Support services 120 112 232 Chartered Accountant Services 207
-
207Courer Services
-
675 675Facility Management Services 61,449 33,760 95,209 Management Consultant Service 28,059 48,870 76,929 Tour Operator Services 703 2,050 2,753 Travel Agents Services 689 200 889 Renting of Immovable Property Service 7,893 7,983 15,876 Total 1,87,798 93,560 2,81,358 ST/1958/2012 Category of input service Total Business Support services 1,286 Chartered Accountant Services 52,473 Packing Services 2,701 Erection, Commissioning or Installation Services 14,162 General Insurance Services 24,973 Facility Management Services 1,69,568 Management Consultant Service 2,81,653 Manpower recruitment Services 23,292 Rent-a-cab Services 42,608 Renting of Immovable Property Services 47,360 Telephone Services 24,299 Tour operator/Travel Agents Services 14,186 Membership of club or Association Services 6,180 Total 7,04,741 ST/1957/2012 Category of input service Dec. 2009 April, 10 to June,10 July to Sept.20 Total Management Consultant Service 28,704 97,179 113,932 239,815 Tour Operator Services& Travel Agent Service including Banking and other financial services 6,862 11,344 16,844 35,050 Business Support services 8,089 5,265 4,638 17,992 Rent-a-cab Services 6,045 0 27,834 33,879 Legal Services 0 16,865 15,457 32,322 Erection, Commissioning or Installation Services 165,996 139,283 13,102 318,381 Chartered Accountants Services 0 412 206 618 General Insurance Services 0 35,069 0 35,069 Telecommunication Services 0 0 5,462 5,462 Total 215,696 305,417 197,475 718,588
3. A Show cause notice was served to the appellants denying the refund claim and after due process of law, the original authority disallowed part of the refund claim. The appellants carried the issue in appeal and vide order impugned herein, the Commissioner (Appeals) observed that the appellants are entitled to credit and eligible for refund with regard to Rent-a-Cab Service. However, the said issue was also not sanctioned but referred to the original authority to verify and restrict the eligibility of credit to the extent of picking up and dropping employees from their residence to offices which works on 24 x 76 basis. Being aggrieved, the appellants have preferred this appeal before the Tribunal.
4. On behalf of the Appellant, the learned counsel Sri Thirumalai submitted that the period involved in all the three appeals are prior to 01-04-2011, when the definition of input services had wide ambit as it included the words: activities relating to business. He explained that renting of immovable property services was availed for the office premises required for the business operations of the appellants unit. Therefore the service tax paid on the rent paid for the premises is eligible for credit. He placed reliance on the judgment in KPMG Vs CCE New Delhi 2013 TIOL 761 CESTAT Delhi:
4.1 Managmemnet consultancy Service / Business Auxillary Services:
These services were received by the appellants in connection with the accounting pay roll, tax and regularity of services rendered by the management and consultants. That these services were essential in functioning and compliance of statutory and legal requirements. That, such services are covered by the definition, which includes within its ambit, the services related to business activities. He placed reliance in the judgments M/s HCL Techno. Ltd. Vs CCE ST Noida, 2015 TIOL 1977, CESTAT Delhi, M/s Hindalco Industries Vs CCE 2014, TIOL 1313, CESTAT Ahmedabad .
4.2 Tour operator services/Banking and financial services:
It is submitted that these services were availed in connection with the services provided by air travel agent to book air tickets for employees for the purpose of travelling to visit clients and conduct business meetings. Such services are required for the purpose of travelling abroad to execute work efficiently and to train the employees. Services of banking and financial services were availed to provide the employees with foreign currency to enable them to meet expenditure, when they are on overseas tour. He relied upon the judgment in Affinity India Pvt. Ltd Vs CCE Pune 2015 37 STR.321 (Tri. Mum) 4.3 Business support services :These services were availed by the appellant in connection with photo copying services, in order to maintain proper document in the office.
4.4 Facility Management Services: These services were used for maintaining the building from where the output services were rendered/ exported.
4.5 Courier services: These services were used for sending document to the customers or vendors, which is an integral part of the appellants business.
4.6 The Chartered Accountant Services: These services were availed in connection with statutory audit, Certification in connection with foreign currency remittances etc That these services are indispensable for rendering the output services.
4.7 Rent-a-Cab Services: Though the commissioner()Appelas) held that appellant is eligible for credit, the same is referred for verification, whether it was for transportation of employees from office to work place. These services were availed by the appellant to provide transportation of employees form their place of residence to work place. That the appellant operates on 24 x 7 basis and such services are highly essential for picking up and dropping of employees.
4.7 Legal services: These services were availed in connection with legal advisory services and would qualify as input services as being in the inclusive part of the division.
4.8 Erection, Commissioning or Installation Services: These services were availed in connection with the installation and annual maintenance charges of various IT equipments and systems installed in the business of the appellant. That these services have specifically covered in the definition of where the services relating to setting up modernization, renovation or repair of a factory, premises of output service provider.
4.9 General Insurance Services: These services were availed for insuring against commercial liability and business risk so as to indemnify the appellant in case of unforeseen damages to the assets.
4.10 Telecommunication services: These services pertain to the use of mobile phone facilities. These services are required to communicate with the customers and vendors and essential for serviced for functioning of the company.
4.11 Membership of club services: These services pertains to membership fee paid to Indian Semi conductors Association. By getting registered in such Association, the appellant would be able to increased its clientele and also augment its business.
4.12 Manpower recruitment supply services: These services were used in connection with the recruitment of manpower needed for functioning of the office. That these services specifically included in the inclusive part of the definition and is eligible for refund. He pleaded that the appeal may be allowed.
5. Per contra the Learned AR appearing for Revenue, Sri Ashok V. Kulgod, reiterated the finding in the impugned order and argued that the refund is not admissible. He submitted that the original authority has observed that the appellants has submitted only invoices and no further evidence to establish the claim of refund. In the order-in-Original, the original authority directed the appellant to reverse the credit irregularly availed along with interest. In the impugned order the Commissioner (Appeals) observed that such a direction by the original authority is beyond the scope of show cause notice and in violation of principle of natural justice. That this being proceedings initiated on claim of refund, separate proceedings for reversal/recovery of credit with interest ought to be initiated. The learned AR then submitted that he needs time to ascertain whether any such separate show cause notice has been issued for reversal/recovery of credit with interest. With regard to the issue whether the credit is admissible on the input services, he submitted that the appellant has not submitted sufficient document to prove that there is nexus between the input service and output services.
6. I have heard the rival submission made and perused the records. The objection raised on behalf of revenue is that they have to ascertain whether any separate show cause notice has been issued for reversal of the irregularly availed credit. In the present appeal, the issue arising for consideration is the eligibility of credit. Even if there is any separate show cause, it would depend on the decision of the issue whether credit is admissible or not. The existence or non existence of any such Show cause notice does not have any bearing to the disposal of this case. Therefore, the said contention is only to be brushed aside.
7. At the outset, it has to be stated that the period involved in all the three appeals is prior to 01-04-2011. The appellants have explained in detail, the various services availed by them. The Tribunals, High Courts as well as the Apex Court in various judgments have held regarding the services listed in the three tables would fall within the phrase activities relating to business. used in the definition of input services. In the appellants own case, in Appeal No.2099/2012, this Tribunal vide Order dated 15-12-2015, has allowed credit on all these services for the period pertaining to January, 2010 to March. 2010 and October, 2010 to December, 2010. In fact the authority below has relied upon the judgment in Maruthi Suzuki India Pvt. Vs CCE Delhi 2009 240 ELT 641 SC to hold that credit is not admissible. The Honble Court in the said case was considering the credit on inputs and not input services. In M/s Coca Cola India (P)Ltd. Pune Vs CCE, Pune III(2009) TIOL-449-HC-ST, it is held that the activities in relation to business can cover all activities relating to the business of the assessee. The other judgments like KPMG Vs CCE, New Delhi (2013-TIOL-761-CESTAT-Del), Affinity express India(P)Ltd Vs CCEA Pune 2015(317) STR 321(Tri-Mumbai) M/s HCL Technologies Ltd Vs CCE & ST, Noida (2015-TIOL-1977 Cestat.Del) cover the issue under consideration. Following the ratio laid in the above judgment and also the decision passed in the appellants own case in Appeal No.2099 of 2012, dated 15-12-2015, I am of the view that the credit on the impugned services is admissible. In Convergys India (P) Ltd Vs CST. Delhi 2009(16) STR 198 Tri-Delhi it was observed that two separate yardsticks cannot be applied for credit and refund. The denial of refund is therefore not justifiable. In view of the above, the impugned order is not sustainable.
7. In the result, the appeals are allowed with consequential reliefs, if any.
(Pronounced and dictated in open court) ( SULEKHA BEEVI. C.S.) MEMBER(JUDICIAL) DKS 2