2013 (10) TMI 1483 - AT - Service Tax

Tribunal Grants Relief on Cenvat Credit Dispute, Emphasizes Nexus Between Input and Output Services

Deloitte Support Services India Pvt. Ltd. Versus C.C.E., Hyderabad-IV

The Tribunal allowed the appeal, granting relief to the appellants regarding the disallowed Cenvat credit on service tax paid for group insurance premium ... CENVAT Credit - group insurance premium - rent-a-cab services - denial on account of nexus - Held that:- The issue is no longer res integra and has been settled in favour of the appellants in view of the decision of the Tribunal in the case of KPMG v. CCE, New Delhi [2013 (4) TMI 493 - CESTAT NEW DELHI], where credit on these services are allowed - credit allowed - appeal allowed - decided in favor of appellant. Issues: Cenvat credit availed on service tax paid on group insurance premium and rent-a-cab services disallowed due to lack of nexus with output services.Analysis:1. The appellant availed Cenvat credit amounting to Rs. 1,42,98,722/- during 2006-07 to 2010-11, which was demanded with interest and penalties under the Finance Act, 1994. The disallowance of credit on service tax paid for group insurance premium and rent-a-cab services was based on the argument that there was no nexus between the input services and the output services provided by the appellant. It was contended that the absence of a direct or indirect relationship between the services on which credit was taken and the output services did not impact the quality or efficiency of the services rendered by the appellant.2. The appellant argued that the issue had already been settled in favor of appellants by the Tribunal in the case of KPMG v. CCE, New Delhi and by the Hon'ble High Courts of Andhra Pradesh and Karnataka in other cases. Citing these precedents, the appellant contended that Cenvat credit should be allowed in such cases. The Tribunal agreed with these submissions and noted that the issue was no longer res integra. Therefore, the Tribunal decided to waive the requirement of pre-deposit and proceeded to finalize the appeal without further delay.3. Considering the settled legal position and the precedents cited, the Tribunal allowed the appeal and granted consequential relief to the appellants. The Tribunal found no valid reason to keep the matter pending any longer, especially after considering the stay application. The decision was pronounced in court at the conclusion of the hearing, bringing the matter to a close.This judgment highlights the importance of establishing a nexus between input and output services when claiming Cenvat credit and emphasizes the significance of legal precedents in resolving such tax disputes.