2017 (5) TMI 1833 - AT - Service Tax

Tribunal Upheld Refund Order, Clarified Cenvat Credit Rules

The Tribunal upheld the Order-in-Appeal, granting the respondent the refund of Cenvat credit under Rule 5 of CCR, 2004. It emphasized the necessity of a ... Refund of CENVAT credit - input services - whether the input services availed by the respondent assessee like air-travel service, man power recruitment service, courier service, and chartered accountant and Rent a Car service, etc. have not been received in or in relation to the provision of the output services? - Held that: - some of the services in question are already specified in rule 2 (l), and I find that each of the service is required by the respondent assessee in providing its output services - The disallowance of input credit in part is also bad and without jurisdiction in absence of notice under Rule 14 of CCR, 2004 - credit allowed. Management consultant service - import of services - reverse charge mechanism - the remuneration paid to Mr. Pooran Tripathi (the employee and director of Stone And Webster's Inc. deputed In USA) for providing services to the respondent company - Held that: - the very essential fact is absent in the findings of the Adjudicating Authority, wherein the facts stated by the assessee that the said person is not its employee, have not been found to be untrue - the learned Commissioner (Appeals) rightly allowed the Cenvat credit in respect of the remuneration paid to Mr. Tripathi - credit allowed. Appeal dismissed - decided against Revenue. Issues:1. Refund of Cenvat credit under Rule 5 of CCR, 2004.2. Whether input services used in providing output services.3. Remuneration paid for Management Consultant Service.Analysis:Issue 1: Refund of Cenvat credit under Rule 5 of CCR, 2004The appellant filed refund claims for specific periods, which were partially allowed and rejected by the original order. The respondent appealed, resulting in the Commissioner (Appeals) allowing the refund under Rule 5 of CCR, 2004. The Revenue contested this decision, arguing that the input services lacked a clear connection to the output services exported. The Revenue highlighted the necessity of an integral connection between the input services and the appellant's business activities. Reference was made to a previous Tribunal ruling for a similar case. However, the respondent contended that various input services were essential for providing the output services, emphasizing the need for qualified personnel and the relevance of services like courier, chartered accountant, and others. The respondent relied on legal precedents to support the claim that such services were integral to the business and should qualify as input services.Issue 2: Whether input services used in providing output servicesThe debate centered on the nexus between input services and output services. The Revenue argued that the input services lacked a direct link to the exported output services, while the respondent asserted that services like recruitment agencies, courier services, and others were crucial for delivering the output services. The respondent provided detailed explanations and relied on legal judgments to support the claim that the input services were indeed utilized in providing the output services. The Tribunal analyzed the arguments and found that the input services were necessary for the respondent's business activities, dismissing the Revenue's contentions.Issue 3: Remuneration paid for Management Consultant ServiceA dispute arose regarding the disallowance of Cenvat credit on remuneration paid to an individual providing Management Consultant Service. The adjudicating authority initially rejected the credit, citing the payment of service tax. The respondent argued that the remuneration was part of an import of service and that service tax had already been paid. The authority's findings were challenged, with the respondent emphasizing that the individual in question was not an employee but a nominee of a joint venture partner. The Tribunal examined the facts and concluded that the remuneration paid should qualify for Cenvat credit, supporting the respondent's position.In conclusion, the Tribunal dismissed the appeals, upholding the Order-in-Appeal and granting the respondent the consequential benefits as per the law. The detailed analysis of each issue highlighted the importance of establishing the connection between input services and output services, as well as the eligibility of remuneration for Cenvat credit in specific circumstances.