2018 (2) TMI 680 - AT - Service Tax

Appellant wins appeal for denied CENVAT Credit on input services in Telecommunication sector.

The appellant, a provider of Taxable Service under 'Telecommunication Services,' contested the denial of CENVAT Credit on certain Input services by the ... CENVAT credit - input services - Business Support Services - Transport of Goods by road - Sponsorship Services - denial on account of nexus - Held that: - these services have been availed for providing output services. Services availed for meetings and trainings held in hotel - Held that: - similar issue came in the case of Hindustan Petroleum Corporation Ltd [2016 (9) TMI 680 - CESTAT HYDERABAD], where it was held that the specific inclusion of services used in relation to “coaching and training”, I hold that the appellant is eligible to avail the aforesaid credit on this item - credit allowed. Repairs and renovation services as well as Manpower Recruitment and Supply Services - Held that: - These fall within the definition of input services and are covered by various decisions - the denial of credit is unjustified. Appeal allowed. Issues:Denial of CENVAT Credit on various Input services availed by the appellant.Analysis:The appellant, a provider of Taxable Service under 'Telecommunication Services' and registered under other categories, availed CENVAT Credit on eligible inputs and services. The dispute arose when the department denied Credit on certain Input services, citing lack of nexus with the output service. The appellant contested this denial, providing detailed explanations for each service in question.The first service in question was 'Meeting and trainings held in hotels for Business improvement and enhancing ability of employees,' amounting to Rs.69,369/-. The appellant argued that these services were essential for business development and employee training, falling under the definition of input service. The appellant supported their claim by referring to relevant judgments, including Hindustan Petroleum Corporation Limited v. CCE & ST and J.P. Morgan Services India Pvt. Ltd. v. Commissioner of ST, Mumbai.The second service under scrutiny was 'Repair and Renovation of the Office premises,' costing Rs.36,727/-. The appellant justified this expense as necessary for maintaining office facilities, citing precedents like J.P. Morgan Services India Pvt. Ltd. v. Commissioner of ST, Mumbai and Knoah Solutions Pvt. Ltd. v. CCE, Hyd.The third service in question was 'Manpower Recruitment and Supply Agency Services,' amounting to Rs.17,160/-. The appellant argued that without manpower, they could not provide output services, making these services directly linked to their operations. The appellant supported this claim by referencing judgments such as Xilinx India Technology Services Limited v. CCE & ST and Ultratech Cement Limited v. CCE & ST Hyd.After hearing both sides and reviewing the submissions and records, the Member (Judicial) found merit in the appellant's arguments. Referring to a previous Tribunal case regarding training services, the Member concluded that all disputed services were eligible for credit. The denial of credit was deemed unjustified, and the appellant was granted the credit for the services in question.In conclusion, the impugned order disallowing credit on the mentioned services was set aside, and the appeal was allowed with consequential reliefs. The judgment highlighted the importance of establishing a nexus between input services and output services for claiming CENVAT Credit, emphasizing the need for a thorough analysis of each service's relevance to the business operations.