Custom, Excise & Service Tax Tribunal
M/S. Juniper Networks India Private ... vs Commissioner Of Service Tax (Appeals) on 16 December, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/636/2010-SM [Arising out of Order-in-Appeal No. 16/2010 dated 11.01.2010 passed by Commissioner of Central Excise (Appeals-II), Bangalore.] M/s. Juniper Networks India Private Limited. Appellant(s) Versus Commissioner of Service Tax (Appeals) Bangalore. KARNATAKA Respondent(s)
Appearance:
Mr. Siddeshwar Yelamali, Manager of the Company For the Appellant Mrs. Ezhilmathi, AR For the Respondent Date of Hearing: 16/09/2016 Date of Decision: 16/12/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 21415 / 2016 Per : S.S GARG The present appeal is directed against the impugned order passed by the Commissioner (A) vide his order dated 11.1.2010 wherein the learned Commissioner (A) has rejected the appeal of the appellant and upheld the Order-in-Original.
2. Briefly the facts of the present case are that the appellant is a 100% EOU registered with STPI carrying out software development activities for its parent company Juniper Networks Inc., USA and customer care service to its subsidiary Juniper Networks, Hong Kong. Both the activities are in the nature of export and both the companies are situated outside India and the consideration is received in convertible foreign currency. The appellant filed a refund claim vide its application dated 31.12.2007 for the period January March 2007 for an amount of Rs.11,08,083/- and another claim was filed on 31.3.2008 for the period April- June, 2007 for an amount of Rs.24,85,008/-. The refund claim was filed under Rule 5 of CENVAT Credit Rules (CCR), 2004. Thereafter a show-cause notice was issued proposing to deny the refund claim. The assessing authority computed the proportionate credit and sanctioned the refund of Rs.87,744/- and rejected the claim of Rs.35,05,347/- vide Order-in-Original dated 25.9.2008. Aggrieved by the said order, the appellant filed appeal before the Commissioner (A) and the Commissioner (A) vide impugned order dated 11.1.2010 upheld the Order-in-Original on the ground that the services on which refund has been claimed do not fall in the definition of input service as contained in Rule 2(l) of CCR. Aggrieved by the said order, the appellant has filed the present appeal.
3. I have heard the learned counsel for the parties and perused the records.
4. Learned authorized representative for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the interpretation of input service as defined under Rule 2(l) of CCR, 2004. He further submitted that both the authorities have failed to consider the judicial pronouncements holding that all such business expenditure incurred in connection with renting of business activity relating to taxable service would fall within the meaning of 2(l) of CCR. He also submitted that all the disputed services have been held to be input services in the appellants own case, by the decision of the Tribunal dated 29.1.2014 in the Final Order No.20114-20115/2014. The learned authorized representative has given the details of the services, the nature of utilization of the same and the precedent decisions in which it has been held that the 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 nature of the service, brief details of the nature of utilization and the precedent decision which covers the issue in favour of the assessee are given in the table below:
Sl.
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. Appellant own case i.e. Juniper Networks India Pvt. Ltd.: Final Order of Bangalore Tribunal Vide No 20114-20115/2014 Commissioner of Central Excise., Hyderabad - IV Vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri.
Bang) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
2. 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. Appellant own case i.e. Juniper Networks India Pvt. Ltd.: Final Order of Bangalore Tribunal Vide No 20114-20115/2014 Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.F. 540 (Tri. - Bang.) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
3. Real Estate Agents 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 quality as input services. Appellant own case Juniper Networks India Private Limited) in the Final Order of Bangalore Tribunal Vide No 20114-20115/2014 Commissioner of Central Excise., Hyderabad - IV Vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri.
Bang) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
4. Outdoor Catering Services The appellant renders services to its client located outside 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. Appellant own case (i.e Juniper Networks India Private Limited) in the Final Order of Bangalore Tribunal Vide No 20114-20115/2014 and Commissioner of Central Excise, Hyderabad - IV vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri Bang) Dell International Services India P.Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
5. 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 qualify as input services.
Juniper Networks India Private Limited) in the Final Order of Bangalore Tribunal Vide No 20114-20115/2014 Glyph International Ltd. Vs. Commissioner of Central Excise, Noida-2013 (12) TMI 1375 - CESTAT NEW DELHI Dell International Services India P. Ltd. vs. CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
6. 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. Appellant own case (i.e Juniper Networks India Private Limited) in the Final Order of Bangalore Tribunal Vide No 20114-20115/2014 Dell International Services India P.Ltd. Vs.CCE Banaglore-2010 (17) S.T.R. 540 (Tri. - Bang.) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahmed.;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
7. 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. Appellant own case (i.e., Juniper Networks India Private Limited) in the Final Order of Bangalore Tribunal Vide No 20114-20115/2014 M/s. Kipp (India) Pvt .Ltd Vs. Commissioner of Central Excise, Mumbai 1-2012-TIOL-1854-CESTAT-MUM Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
8. Security Agency Services Provision of the security at the office premises is essential for checking and monitoring all the inward and outward movements of personnel and all goods including capital goods. Additionally to prevent any theft or loss of highly confidential data / equipments. The business operation of respondent involve handling confidential data and therefore, the respondent is required to have fool proof security arrangements.
No organization can run the operations without the support of the security agencies to guard people, assets and data. Hence it is essential for business and therefore such services qualify as input services. Appellant own case (i.e., Juniper Networks India Private Limited) allowed by the Commissioner of Central Excise (Appeals II) for the period April 2006 to December 2006 vide OIA 292/2008 C . Cubed Solutions Private Limited Vs Commissioner C. EX., Bangalore 2013 (293) E.L.T 398( Tri - Bang) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
9. Manpower Recruitment Services Manpower is an essential requirement of the IT and ITES industry. The procurement of these services is essential in view of the labour turnover and in order to identity the right resource for the right job at the right time. Identification and recruitment of manpower is undertaken through professional engaged in this vertical, viz., manpower recruiters and head hunters.
The inclusive part of the definition of input services specified includes recruitment activities and hence the manpower recruitment services qualifies as input service. Appellant own case (i.e Juniper Networks India Private Limited) allowed by the Commissioner of Central Excise (Appeals II) for the period April 2006 to December 2006 vide OIA 292/2008 C . Cubed Solutions Private Limited Vs Commissioner C. EX., Bangalore:
2013 (293) E.L.T 398( Tri - Bang) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT - Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del.
10. Clearing and Forwarding Agent Services The networking equipments, machines, computers and servers required for performing the services are primarily imported by the respondent. The respondent has availed clearing and forwarding agents services in documentary process and arrangement for transfer of such goods from customs port upto the office premises. These imported networking equipments and servers are essential to provide the output services. Without incurring these charges it would not be possible to import the IT equipments which are required for providing output service. Therefore these services qualify as input services. Appellant own case (Juniper Networks India Private Limited) allowed by the Commissioner of Central Excise (Appeals II) for the period April 2006 to December 2006 vide OIA 292/2008 C . Cubed Solutions Private Limited Vs Commissioner C. EX., Bangalore 2013 (293) E.L.T 398( Tri - Bang) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del.
11. Management Maintenance and repairs Maintenance of equipments such as computers and building used for provision of output services (domestic and export service) Appellant own case (i.e Juniper Networks India Private Limited) allowed by the Commissioner of Central Excise (Appeals - II) for the period Jan 2008 to March 2008 vide CIA No. 220 to 226 /2011 Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del.
12. Courier Services Used for the purpose of exporting the documents necessary for output services (domestic and export service) Appellant own case (Juniper Networks India Private Limited) allowed by the original authority for the period Jan 2008 to March 2008 vide 010 No. 264/2009 Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del.
13. Commercial Training / Coaching Services The IT enabled service centers, being labour oriented organisations, cannot operate without appropriate people with the right skill. The respondent has availed services of professional trainers to provide training of functional skills to the employees for the back-office operations, management and administrative functions for customers, relating to the process and systems on which they are required to work so that they become familiar with various requirements of the job with increased efficiency. Further, the inclusive part of the definition of 'input services specifically include coaching and training and hence the services procured in relation commercial coaching and training service qualify as input service. Appellant own case (i.e. Juniper Networks India Private Limited) allowed by the original authority for the period Jan 2008 to March 2008 vide 010 No. 264/2009 Commissioner of Central Excise., Hyderabad - IV Vs. Deloitte Tax Services India Private Limited 2008 (11) S.T.R 266 (Tri. -
Bang) Capiq Engineering Pvt. Ltd. 2008 - TIOL -2008 -1967 -CESTAT -
Ahm;
M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
14. Banking and Financial Services These services incurred for the purpose of Business which falls within the definition of input service. M/s Convergys India Pvt. Ltd. 2009-TIOL-888 CESTAT Del
5. On the other hand, the learned AR reiterated the findings in the impugned order.
6. After considering the submissions of both the parties and judgments cited in support of various services, it is quite clear that the appellant is eligible for the benefit of refund in respect of services in dispute and therefore, I allow the appeal of the appellant 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 services. With these observations, the present appeal is allowed by way of remand.
(Order was pronounced in Open Court on 16/12/2016.) S.S GARG JUDICIAL MEMBER rv 11