Appeals Granted for Input Services Exported, Exclusions Upheld, Refunds Allowed under Cenvat Credit Rules

The Tribunal allowed all appeals except for refund claims related to Outdoor Catering and Rent-a-Cab Service, excluded from the definition of 'input service' post an amendment. Refunds were granted for other input services with a nexus to output services exported, citing Rule 5 of the Cenvat Credit Rules. Decision announced on 12/04/2017 by Shri S.S Garg, Judicial Member of the Appellate Tribunal CESTAT Bangalore.

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Issues: Refund claims rejected on grounds of lack of nexus and services not covered by the definition of 'input service'.

Analysis:

Issue 1: Lack of Nexus
The appellants filed seven appeals against the rejection of refund claims on input services due to a lack of nexus between the input services received and the output services exported. The Assistant Commissioner of Service Tax rejected the claims, stating that the nexus was not established. The Commissioner (Appeals) upheld this decision, leading to the appeals. The appellant argued that the impugned order denying the refund is contrary to the Cenvat Credit Rules and Notification 5/2006. The appellant contended that the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules is broad and includes services related to modernization, renovation, or repairs. The appellant cited various tribunal and high court decisions supporting their claim that the input services are directly or indirectly related to the output service exported.

Issue 2: Definition of 'Input Service'
The learned consultant for the appellant argued that all input services, except Outdoor Catering and Rent-a-Cab Service, fall within the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules. The appellant agreed not to press the refund claims for Outdoor Catering and Rent-a-Cab Service as these services were excluded from the definition post an amendment effective from 01.04.2011. The Tribunal found that services like Parking, Cafeteria, Fitouts, Building, Housekeeping, Management Consultant Services, Custom House Agent Service, Supply of Tangible Goods Service, and Event Management Service are covered under the definition of 'input service' and hence, the appellants were entitled to refunds for these services under Rule 5 of the Cenvat Credit Rules.

Conclusion
The Tribunal allowed all the appeals except for the refund claims related to Outdoor Catering and Rent-a-Cab Service. The decision was based on the fact that these two services were excluded from the definition of 'input service' post an amendment in 2011. The appellants were granted refunds for the other input services as they were deemed to have a nexus with the output services exported. The order was pronounced in open court on 12/04/2017 by Shri S.S Garg, Judicial Member of the Appellate Tribunal CESTAT Bangalore.

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