Computer use alone does not convert back-office tax support into information technology service; Cenvat credit and refund allowed.

Preparation of tax returns, data analysis and related back-office work performed through computers did not become an information technology service merely because computers were used. The decisive test was whether the service was primarily in relation to computer systems or software; on that basis, it remained taxable business auxiliary service. Because the output activity was taxable, the assessee was entitled to Cenvat credit on eligible input services and consequential refund where those inputs were necessary for providing the output service. The Revenue's nexus challenge was not open for consideration as it was not framed as a substantial question of law, and the factual finding on nexus was sustained.

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Issues: (i) Whether the services of preparation of tax returns, data analysis and related back-office work rendered through computers fell within the excluded category of information technology service or remained taxable business auxiliary service; (ii) Whether the assessee was entitled to Cenvat credit and refund on input services used for the output service; (iii) Whether the Revenue could successfully urge want of nexus between input services and output services in the present appeal.

Issue (i): Whether the services of preparation of tax returns, data analysis and related back-office work rendered through computers fell within the excluded category of information technology service or remained taxable business auxiliary service.

Analysis: The statutory exclusion in the definition of business auxiliary service applied only to services in relation to designing, developing or maintaining computer software, computerized data processing, system networking, or other services primarily in relation to operation of computer systems. Mere use of computers or software in performing a service did not, by itself, convert the service into information technology service. The nature of the assessee's work was back-office support and tax-related assistance, not a service primarily in relation to computer systems.

Conclusion: The services remained taxable business auxiliary service and did not fall within the excluded category of information technology service.

Issue (ii): Whether the assessee was entitled to Cenvat credit and refund on input services used for the output service.

Analysis: Once the output activity was held to be taxable business auxiliary service, the assessee could avail credit on eligible input services under the Cenvat Credit Rules. The input services were found to be necessary for providing the output service, and the interpretation that credit was confined only to services directly used in a narrow sense was rejected.

Conclusion: The assessee was entitled to Cenvat credit and consequential refund on the input services.

Issue (iii): Whether the Revenue could successfully urge want of nexus between input services and output services in the present appeal.

Analysis: The challenge on nexus had not been framed as a substantial question of law at the stage of admission and therefore was not open for consideration in the appeal. In any event, the factual finding accepting nexus was sustained.

Conclusion: The Revenue failed on this contention.

Final Conclusion: The appeal was rejected in full, and the orders granting refund based on eligible Cenvat credit were left undisturbed.

Ratio Decidendi: A service does not become information technology service merely because computers are used in its performance; the decisive test is whether the service is primarily in relation to computer systems or programming as contemplated by the statutory exclusion.

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