CENVAT credit on hall hire and hotel accommodation accepted where services supported market research activities.

Revenue's denial of CENVAT credit failed because it did not establish absence of nexus between the disputed services and the taxable output market research service. The Tribunal accepted that hall hire and hotel accommodation used for market research activities were input services used in providing the output service, and therefore qualified for credit. The disallowance was set aside, and the assessee was entitled to CENVAT credit.

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Issues: Whether service tax paid on hall hire in hotels and hotel accommodation used for market research activities qualified as input services for CENVAT credit.

Analysis: The claim was examined in the context of denial of CENVAT credit on the ground of lack of nexus with the output service. The Tribunal held that, since the show cause notice was issued by Revenue, the burden lay on Revenue to establish absence of nexus between the disputed services and the output market research service. The findings of the lower authorities did not show that this burden had been discharged. On the material before it, the Tribunal accepted that hiring of halls and hotel rooms for market research activities constituted input services used for providing the output service.

Conclusion: The disputed services were held to be eligible input services and the assessee was entitled to CENVAT credit.

Final Conclusion: The disallowance of credit was set aside and the assessee succeeded on the substantive credit eligibility issue.

Ratio Decidendi: Where Revenue seeks denial of CENVAT credit, it must establish the absence of nexus between the disputed input services and the output service, and credit is admissible when those services are found to be used for providing the taxable output service.

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