2023 (11) TMI 1076 - AT - Service Tax

Export service provider wins refund claim for input services with direct nexus to exports

Xilinx India Technology Services Pvt Ltd Versus Commissioner of Central Tax Hyderabad - IV

CESTAT Hyderabad allowed the appeal and set aside the impugned order rejecting part refund for the period April 2011 to September 2011. The tribunal held ... Part refund rejected - Air Travel Agent services - Banking and Financial services - Business Support services - Chartered Accountant services - - Custom House Agent services - General Insurance services - Facility Management Services - Management, Maintenance & Repair services - Management or Business Consultant services - Rent-a-Cab services - Telecommunication services - rejection on the ground that there is no nexus between input services and the output services exported by the Appellant - period of dispute is from April 2011 to September 2011. Air Travel Agent services - HELD THAT:- These services are in connection with services provided by the air travel agent to book air tickets for employees travelling for the purpose of visiting clients or conducting business meetings. The service is also required for the purpose of travelling abroad for getting training to execute the work effectively and train others. Therefore, travelling is essential and is used by the appellant directly in connection with the export of output services - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Banking and Financial services - HELD THAT:- These services were received to provide employees with the foreign currency to enable them to meet the expenditure during overseas tour to meet the client and hence, directly connected with the rendering and export of output services by the Appellant - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Business Support services - HELD THAT:- These services are in connection with photocopying, including record maintenance services, required to maintain proper documentation and hence, essential for proper functioning of the Appellant - Reliance can be placed in Appellant’s own cases in Final Order No. A/30012/2015 passed for the period January 2010 to March 2010 and October 2010 to December 2010 [2016 (8) TMI 40 - CESTAT HYDERABAD]. Chartered Accountant services - HELD THAT:- These services were in connection with the issuance of certificate in connection with foreign currency remittances, statutory and tax audit including transfer pricing study - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Courier services - HELD THAT:- These services are for sending documents to customers and/or vendors, which is an integral part of the appellant’s business. Also such courier facility was not used for employees for their personal use and the same was exclusively used by the appellant for their business purposes - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Custom House Agent services - HELD THAT:- These services were availed in connection with import of IT equipment’s where the Custom House agents assist the appellant in the customs clearance process relating to the imported goods. These services are eligible considering that they are in relation to import of goods which in turn are used in the development of software for export - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. General Insurance services - HELD THAT:- These services were for the purpose of insuring the office premises from fire and burglary, without which the appellant cannot render the taxable service - Reliance can be placed in RMZ Infotech Private Limited Vs. CCT, Bangalore East [2021-VIL-822- CESTAT-BLR-ST] [2021 (11) TMI 1108 - CESTAT BANGALORE]. Facility Management Services - HELD THAT:- These services are essentially in relation to day to day maintenance of the facility including security, cleaning and housekeeping services so that the work can be conducted in the business premises efficiently and flawlessly - Reliance can be placed in Appellant’s own cases in Final Order No. A/30012/2015 passed for the period January 2010 to March 2010 and October 2010 to December 2010 [2016 (8) TMI 40 - CESTAT HYDERABAD]. Management, Maintenance & Repair services - HELD THAT:- These services are procured in relation to the office maintenance, maintenance or repair of IT equipment and other machinery like computer servers, air conditioning systems etc. which are required for efficient functioning of business without which the appellant cannot perform its output service - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Management or Business Consultant services - HELD THAT:- These services are in connection with the accounting, payroll, tax and regulatory services rendered by the management consultants. These services are very essential in functioning, compliance with the statutory and legal requirements and making the operations of the Appellant more cost-efficient - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Rent-a-Cab services - HELD THAT:- These services are availed in order to provide transportation to employees from their place of residence to work place and back and hence, essential for the provision of output services by the company and hence, eligible for credit and refund. Further, the Appellant has taken Cenvat credit on the rent-a-cab services which were used prior to April 1, 2011 - Reliance can be placed in Appellant’s own cases in Final Order No. A/30012/2015 passed for the period January 2010 to March 2010 and October 2010 to December 2010 [2016 (8) TMI 40 - CESTAT HYDERABAD]. Telecommunication services - HELD THAT:- These services in the nature of tele-conference facilities, telephone connections and mobile phone facilities are required in order to communicate with customers and vendors and hence, essential for the functioning/business of the appellant - Reliance can be placed in Appellant’s own cases in Final Order No. A/30281/2016 passed for the period January 2012 to March 2012 [2017 (1) TMI 658 - CESTAT HYDERABAD]. Thus, in view of the facts and circumstances of the case and considering the relied upon case laws, the Appeal filed by the Appellant is allowed and the Impugned Order set aside - appeal allowed. Issues involved: The appeal against the rejection of a part of refund by the learned Commissioner on the grounds of lack of nexus between input and output services exported by the Appellant.Air Travel Agent services (Rs.56,156/-): The services provided by the air travel agent for booking air tickets for business purposes were deemed essential for executing work effectively and training employees, directly connected with the export of output services. Relevant case laws were cited in support of this contention.Banking and Financial services (Rs.9,838/-): Financial services were received to provide foreign currency for overseas tours to meet clients, directly linked to the rendering and export of output services. Relevant case laws were cited to support this claim.Business Support services (Rs.7,926/-): Services like photocopying and record maintenance were necessary for proper documentation, essential for the functioning of the Appellant. Citing relevant case laws, the connection between these services and the output services exported was established.Chartered Accountant services (Rs.11,500/-): Services related to foreign currency remittances and audits were crucial for compliance and certification purposes, directly linked to the export of output services. Case laws were referenced to support this argument.Courier services (Rs.5,999/-): Utilization of courier services for business purposes, excluding personal use, was integral to the Appellant's operations. The exclusive business use of these services was highlighted, supported by relevant case laws.Custom House Agent services (Rs.68,109/-): Services availed for customs clearance of imported IT equipment, essential for software development for export, were deemed eligible for refund. Case laws were cited to strengthen this argument.General Insurance services (Rs.52,967/-): Insurance services for office premises were necessary for the Appellant to render taxable services, as highlighted by relevant case laws referenced in support of this claim.Facility Management Services (Rs.3,80,302/-): Day-to-day maintenance services for efficient business premises operations were crucial for the Appellant's functioning. The necessity of these services was supported by relevant case laws.Management, Maintenance & Repair services (Rs.2,47,254/-): Maintenance services for office equipment and machinery were essential for business operations, directly impacting the output services. Relevant case laws were cited to reinforce this argument.Management or Business Consultant services (Rs.1,79,812/-): Consulting services for accounting, tax, and regulatory compliance were vital for operational efficiency, statutory adherence, and cost-effectiveness. Case laws were referenced to support the connection between these services and the output services.Rent-a-Cab services (Rs.22,458/-): Transportation services for employees were necessary for the provision of output services, with Cenvat credit taken on services used before a specified date. Relevant case laws were cited to support the eligibility for credit and refund.Telecommunication services (Rs.2,25,274/-): Telecommunication facilities for communication with customers and vendors were essential for business operations, as supported by relevant case laws referenced in the argument.The appeal filed by the Appellant was allowed, setting aside the Impugned Order, based on the established nexus between the input services and the output services exported. The Appellant was granted consequential benefits in accordance with the law.