2016 (7) TMI 155 - AT - Service Tax

Appellant wins refund claim in software development case under Cenvat Credit Rules

M/s Broadcom India Technologies Pvt. Ltd. Versus The Commissioner C.C.E & ST, Hyderabad

The appellant, engaged in software development and IT services, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004. The Commissioner (Appeals) ... Refund of unutilized cenvat credit - Commissioner (Appeals) denied refund disallowing the credit on some input services, observing that the input services do not have nexus with output services. - the period involved is prior to 01-04-2011. - Held that:- As rightly submitted by the consultant appearing for the appellant, the definition of input services during the relevant period had a wide ambit as it included the words activities relating to business . The Tribunal as well as the Courts in numerous judgments have laid that almost all services would be eligible for credit /refund, if such services were needed for the business of the service provider. Appellants are eligible for refund of service tax paid on the impugned services - further interest on delayed refund shall be granted to the appellant. - Decided in favor of assessee. Issues:Refund claim under Rule 5 of Cenvat Credit Rules, 2004 r/w Notification No.5/2006 CE(NT) dated 14-03-2006; Denial of refund on some input services; Nexus between input services and output services; Eligibility of various input services for refund; Technical defect in some invoices regarding service provider's registration number.Analysis:1. The appellant, engaged in software development and IT services, filed a refund claim due to inability to utilize service tax credit on inputs. After due process, part of the claim was sanctioned, but some input services were disallowed. The Commissioner (Appeals) further denied refund on certain services, citing lack of nexus with output services and technical defects in invoices lacking service provider registration numbers.2. The appellant argued that during the relevant period, the definition of input services was broad, covering activities related to business. They contended that the disallowed services were essential for their business operations. The list of services included interior decoration, construction, insurance, travel, banking, conventions, and more, all deemed crucial for business functionality.3. The Commissioner (Appeals) justified the denial based on the perceived lack of nexus between input and output services. However, the Tribunal highlighted precedents emphasizing that most services essential for business operations are eligible for credit/refund. The judgment in Maruthi Suzuki Ltd was deemed inapplicable as it pertained to inputs, not input services.4. The AR reiterated the findings of the impugned order, supporting the denial of credit/refund. However, the Tribunal noted that services like insurance were eligible if availed for employees, regardless of coverage for dependents. Precedents like Coco Cola India Pvt.Ltd and others supported the eligibility of the contested services for refund/credit.5. The Tribunal found that the appellant had established the input services were utilized for providing output services, thus qualifying for refund. Technical defects in invoices, such as missing service provider registration numbers, were deemed inconsequential and condonable. The order granting interest on the refund was upheld.6. A miscellaneous application regarding a change in the appellant's address was noted, directing the Registry to update correspondence accordingly. The appeal was allowed with consequential reliefs, if any, in favor of the appellant.