2012 (12) TMI 73 - HC - Service Tax

Tribunal Decision Upheld: Eligibility for Input Credit Confirmed

COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, HYDERABAD-IV Versus M/s DELOITTE TAX SERVICE INDIA PVT. LTD.

COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, HYDERABAD-IV Versus M/s DELOITTE TAX SERVICE INDIA PVT. LTD. - 2014 (33) S.T.R. 129 (A. P.) Issues Involved:1. Classification of services provided by the assessee.2. Eligibility for input service credit.3. Applicability of Rule 5 of the Cenvat Credit Rules, 2004 to refunds.Issue-wise Detailed Analysis:1. Classification of Services Provided by the Assessee:The core issue was whether the services provided by the assessee to M/s. Deloitte Tax LLP, USA, such as preparation of tax returns and data processing, fell under 'Business Auxiliary Service' or 'Information Technology Service' as defined under Section 65 (19) of the Finance Act, 1994. The Tribunal and Commissioner (Appeals) concluded that the services provided by the assessee were not in relation to designing, developing, or maintaining computer software or computerized data processing, and thus did not fall under 'Information Technology Service.' They emphasized that the services were primarily back-office support, which aligns with 'Business Auxiliary Service.' The Tribunal also noted that using computers for providing services does not automatically classify them as 'Information Technology Service.'2. Eligibility for Input Service Credit:The Commissioner initially denied the assessee's claim for input service credit, arguing that the services provided were non-taxable and did not have a direct nexus with the output services. However, the Commissioner (Appeals) and the Tribunal disagreed, stating that the definition of 'input service' under Rule 2 (L) of the Cenvat Credit Rules, 2004, includes services used in relation to the business of providing output services. They held that the input services availed by the assessee, such as equipment hiring and professional consultation, were necessary for providing the output services and thus eligible for input service credit.3. Applicability of Rule 5 of the Cenvat Credit Rules, 2004 to Refunds:The Revenue contended that the amendment to Rule 5 on 14-03-2006 should not apply to refunds for exports made prior to that date. The Tribunal, however, upheld the assessee's entitlement to the refund, stating that the amendment allows for such refunds and the services provided by the assessee were taxable under 'Business Auxiliary Service,' making them eligible for input service credit and consequent refund.Conclusion:The High Court dismissed the appeal, supporting the Tribunal's and Commissioner (Appeals)'s findings that the services provided by the assessee were 'Business Auxiliary Services' and not 'Information Technology Services.' The Court also upheld the eligibility for input service credit and the applicability of the amended Rule 5 for refunds. The Court emphasized that issues of service classification and nexus between input and output services cannot be revisited under Section 35-G of the Central Excise Act, 1944.