Custom, Excise & Service Tax Tribunal
Cst Bangalore vs Yodlee Infotech (P) Ltd on 27 March, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Application(s) Involved: ST/CROSS/78/2011 in ST/414/2011-SM Appeal(s) Involved: ST/414/2011-SM [Arising out of Order-in-Appeal No. 604-2010 dated 23/11/2011 passed by CCE(Appeals-II), Bangalore] For approval and signature: HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER 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 Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? CST BANGALORE NO. 16/1, S.P. COMPLEX, LALBAGH ROAD, Appellant(s) Versus YODLEE INFOTECH (P) LTD NULL Respondent(s)
Appearance:
Shri Pakshi Rajan, Asst. Commissioner(AR) For the Appellant Shri N. Anand, Advocate For the Respondent Date of Hearing: 27/03/2015 Date of Decision: 27/03/2015 CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER Final Order No. 20876 / 2015 Per : B.S.V. MURTHY Revenue is in appeal against the impugned order wherein the learned Commissioner in his order has allowed the benefit of refund under Notification No.5/2006-CE(NT) read with Rule 5 of CENVAT Credit Rules, 2004. While allowing the benefit of various services, the Commissioner disallowed a portion of the credit available on the ground that service tax credit in respect of terrace area and parking space in respect of rented immovable property is not admissible. The assessee has filed cross-objections and in the cross-objections, they have claimed that service tax benefit would be available in respect of these areas also.
2. Heard both the sides. The learned counsel submits that the stand taken by the Revenue that credit is not admissible in respect of terrace and parking area is not sustainable in view of the decision of this Tribunal in the case of CST Vs. Mercedes Benz Research & Development India (P) Ltd. [2013(30) STR 257 (Tri. Bang.)] and as regards the credit of service tax paid on rent of immovable property of unregistered premises, he relies on the decision of the Honble High Court of Karnataka in the case of mPortal India Wireless Solutions P. Ltd. Vs. CST [2012(27) STR 134 (Kar.)]. I find both these decisions are applicable and according to these decisions, the terrace area and parking area cannot be excluded while calculating the admissible credit in respect of renting of immovable property service and the credit of tax paid on renting of office premises also is admissible as per the Honble High Court Karnatakas decision. As regards the remaining services, the stand taken by the Revenue is that there is no nexus. The respondent submitted a brief write up which is reproduced below:-
Maintenance & Repair Service: This includes the service charges paid towards repairs/maintenance of Computer Systems and Systems Software used in the development of the Software. Also it includes the Annual Maintenance charges paid towards maintenance of Systems, air-conditioning and other equipments etc. Management or Business Consultancy: These Services are pertaining to the services obtained for employees working for Software development services payroll and salary processing services, UPS/back-up services, Software annual Maintenance charges, User License fees paid, charges towards Employee Assistance programmes, towards maintenance charges paid to Electrical systems without which development will not takes place etc. Also includes the Maintenance of employees Attendance and other particulars and processing of monthly salaries of the employees and remittances of deductions from salaries such as PF, ESI etc. to the Statutory authorities on a monthly basis.
Renting of Immovable property service: This includes rent & maintenance charges paid to the Building/premises taken on rent towards installation of Computer Systems and Workstations provided to employees for sitting and development of Software exports. We are using all the rented space of 46082 Square feet building exclusively for the purpose of Development of Software services. Evidencing the same, we have enclosed along with claim the Customs Bonding letter issued by the Office of Deputy Commissioner of Customs.
Manpower recruitment: As the name indicates, these services are pertaining to the salaries paid to temporary Software employees, Technical staff taken on deputation basis from other companies etc. Also included the charges paid towards contract placement of technical personnel in the Company, Staff providing charges on person basis etc. As you aware if you take a senior employee on regular salary basis, we need to pay a commitment charges every month, as such we are hiring some employees on assignment basis and reduce the commitment charges which in the present day of life is a major cost saving for the Company when we are struggling for narrow margins in the market. All the wages paid to such employees are included in the head "Manpower Recruit or Supply Services Company Secretary: As the name indicates services related Company Secretarial matters relating to Registrar of Companies and fee paid to the Company Secretary to execute these Statutory and other incidental services which are mandatory as per Companies Act, 1956.
Business Support Services: These services include Tapes, Records and other software media handling charges, their transportation and administration charges, Retainer Fee for Employee assistance programmes, administrative charges for maintenance of monthly employee records etc. Services includes the Maintenance of employees Attendance and other particulars and processing of monthly salaries of the employees and remittances of deductions from salaries such as PF, ESI etc. to the Statutory authorities on a monthly basis.
Business Auxilliary Services: Most of these charges are pertaining to the service charges for issuing the Sodexho passes to the employees for meals etc. Security Agency services: These include the charges paid for the Security agencies towards Security Staffs who are engaged in the supervision/assistance of the office/factory/building used for development of software services.
3. On going through the write up, I find that all the services are covered by the definition of input service and there is nexus between the output service and the input services. Further it was also submitted that in the show-cause notice, one of the grounds taken was that according to Notification No.5/2006-CE(NT) as it existed during the relevant time, Revenue if of the view that CENVAT credit use in providing output service was only admissible and therefore the credit can be allowed only when the use is in providing output service which a far more restricted term than the used term for. He submits that in 2010, Notification No5/2006 was amended retrospectively and in place of words used in, words used for were substituted. This removed distinction between the provisions of CENVAT Credit Rules which provide for use of input service for providing output service and the notification which used the words used in. I find this submission to be appropriate for considering the admissibility of CENVAT credit and refund thereof in respect of these services.
4. In view of the above discussion, appeal filed by the Revenue has no merits and is rejected. The cross-objections filed by the appellant is considered as appeal in accordance with law and the benefit of balance credit disallowed by the Commissioner(Appeals) while passing the impugned order is also allowed. In the result, the respondents shall be entitled for the entire amount of refund which had been claimed by him. The appeals are decided in above terms.
(Pronounced and dictated in court) B.S.V.MURTHY TECHNICAL MEMBER Raja.
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