Cenvat credit on business support services allowed when linked to manufacture; invoices accepted and exclusions examined.

Dispute concerns whether business support services qualify as input services and whether Cenvat credit can be availed for services received outside the factory. The tribunal reasoned that the definition of input service under the Cenvat Credit Rules covers services used directly or indirectly in or in relation to manufacture and clearance, and therefore business support services incurred as business expenses before the 2011 amendment were eligible for credit; outcome: credit allowed for April 2007March 2011. For the post-2011 period the service was not specifically excluded, so invoice evidence was held sufficient for credit; outcome: invoices accepted and credits allowed.

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Issues: Whether Cenvat credit of service tax paid on Business Support Services (invoices issued by a group shared services provider) is admissible as input service to the manufacturer for the periods under consideration.

Analysis: The invoices were issued monthly describing business support expenses and the service provider was registered and had discharged service tax liability under the category of Business Support Services. Rule 3 of the Cenvat Credit Rules, 2004 permits a manufacturer of excisable goods to take Cenvat credit of service tax where the input service has been received by the manufacturer. Rule 2(l) defines "input service" to include services used, whether directly or indirectly, in or in relation to manufacture of the final product and clearance up to the place of removal. For the period before the amendment effective 01.04.2011, "activities relating to business" were explicitly within the definition; after amendment Business Support Service was not specifically listed as an excluded service. The allocation or apportionment of expenses by the service provider does not alter the nature of the service supplied or its characterization as Business Support Services; value is the gross amount charged for the taxable service. Prior coordinate authority has examined identical issues and found such services to qualify as Business Support Services and as input services where they are used by the manufacturer.

Conclusion: Cenvat credit of service tax paid on Business Support Services (as evidenced by the invoices) is admissible as input service; the impugned orders denying credit are set aside and the appeals are allowed in favour of the assessee.

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