Case Law Details

Case Name : DBOI Global Services P Ltd Vs C.C.G.ST. (CESTAT Mumbai)
Appeal Number : Service Tax Appeal No. 89787 of 2018
Date of Judgement/Order : 04/03/2020
Related Assessment Year :
Courts : All CESTAT (1058) CESTAT Mumbai (199)

DBOI Global Services P Ltd Vs C.C.G.ST. (CESTAT Mumbai)

The issue under consideration is that whether Event Management Service, short term accommodation, storage and packing, Management, Maintenance & Repair, Business Auxiliary Service and Business Support Services these are considered as Input Service or not?

The appellant who is registered under the Software Technology Park of India Scheme, provides services in relation to business processes/ support services to its clients mostly located outside India and only few i.e. to say only 3% of their clients are located within India. They filed a refund claim of Rs.11,62,00,568/- for the period April, 2016 to June, 2016 of Cenvat Credit of Service Tax paid on input services as per Rule 5 ibid read with notification No.27/2012-C.E.(N.T.) dated 18.6.2012 on the ground that the output services provided during the said period have been exported and that they were not in a position to utilize the Cenvat Credit of duty/Service Tax taken on the input services used for providing such services for export. The Adjudicating Authority vide Order-in-Original dated 21.6.2017 sanctioned the refund claim of ₹ 11,39,25,548/- and rejected the amount of ₹ 18,25,856/- on the ground that some of the services have not been actually gone into consumption for provision of output services and ₹ 4,49,164/-on the ground that the documents/invoices submitted did not mention the description properly or no nexus. Therefore a total of Rs. 22,75,020/- was rejected.

The definition of input service as given in Rule 2(l) ibid is an inclusive definition which means that it is not exhaustive. So far as the Event Management Service and Short Term Accommodation services are concerned, they were rejected on the ground that no tangible documents were produced and these services did not qualify as input service. CESTAT have gone through the justification provided by the Appellants as well as the relevant documents, which according to the learned counsel were produced before the learned Commissioner also. In innumerable decisions of the Tribunal it has been held that Event Management Service which is procured for the purpose of business development meetings and events to plan strategy for the future development etc. is qualify as input service and therefore eligible for credit. These kind of events are essential to keep the employees motivated, committed and to foster relationships. Thus these services are actually procured in relation to the business which helps them in improving interpersonal skills, rejuvenate, increase efficiency and to improve their performance in the business. Similarly the short term accommodation was required by the Appellants for its employees’ official visits to other locations for business operations/ meetings and therefore this service is also eligible for credit. The other services viz. storage and packing, Management, Maintenance & Repair, Business Auxiliary Service and Business Support Services were rejected on the ground of either no nexus or description not properly mentioned on the invoices. So far as nexus is concerned CESTAT have gone through the records and am satisfied that the Appellants have successfully established the nexus and also that in its absence, the quality and efficiency of the provisions of services exported was going to be adversely impacted. So far as few discrepancies in some of the documents/invoices are concerned it is settled law that any beneficial provision should be interpreted liberally and for a mere procedural lapse, substantive benefit cannot be denied to the Assessee. In the instant matter no serious discrepancy has been noticed or pointed out by the learned Commissioner while rejecting the claim. Incomplete name or description of services appearing in invoices is clerical error and that does not mean that the appellant have not received and used the services and for this reason Cenvat credit/refund cannot be denied. It has also been established by the Appellants that none of the above services were used by the Appellants for the personal use of its employees. Therefore in my view the aforesaid service very well fall within the inclusive definition of input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004 and as such the Appellant are eligible to take refund of accumulated Cenvat Credit of service tax under Rule 5 ibid as exporter of service. The Appeal filed by the Appellant is accordingly allowed with consequential relief, as per law.

FULL TEXT OF THE CESTAT JUDGEMENT

This appeal has been filed challenging the order dated 13.08.2018 passed by the Commissioner (Appeals-II) of CGST & Central Excise, Mumbai in Order-in-Appeal No. PK/723/ME/2018.

2. Briefly the facts of the present case are that the appellant who is registered under the Software Technology Park of India Scheme, provides services in relation to business processes/ support services to its clients mostly located outside India and only few i.e. to say only 3% of their clients are located within India. They filed a refund claim of Rs.11,62,00,568/- for the period April, 2016 to June, 2016 of Cenvat Credit of Service Tax paid on input services as per Rule 5 ibid read with notification No.27/2012-C.E.(N.T.) dated 18.6.2012 on the ground that the output services provided during the said period have been exported and that they were not in a position to utilize the Cenvat Credit of duty/Service Tax taken on the input services used for providing such services for export. The Adjudicating Authority vide Order-in-Original dated 21.6.2017 sanctioned the refund claim of ₹ 11,39,25,548/- and rejected the amount of ₹ 18,25,856/- on the ground that some of the services have not been actually gone into consumption for provision of output services and ₹ 4,49,164/-on the ground that the documents/invoices submitted did not mention the description properly or no nexus. Therefore a total of Rs. 22,75,020/- was rejected. On appeal filed by the appellant, the Commissioner (Appeals-II) vide impugned order dated 13.8.2018 partly allowed the appeal filed by the appellant and allowed the refund of total amount of ₹ 18,53,371/- but maintained the rejection of Rs.4,49,164/- on the ground of no nexus or description not mentioned properly on the invoices.

3. Learned counsel for the Appellant submits that the refund claim on Event Management Service, short term accommodation, storage and packing, Management, Maintenance & Repair, Business Auxiliary Service and Business Support Services was rejected by the authorities below. He further submits that the learned commissioner erred in rejecting the refund claim on Event Management Service which was availed by the Appellants for organizing events/seminars/training and such events are arranged to discuss future plans, take stock of implementation plans already made, arrangement for the townhall, employee briefing and other business discussions and that the said services are essentially used for providing the output services. He also submits that the Short term accommodation service was availed for employees’ official visit to other locations for business operations and meetings. So far as storage and packaging, Management, Maintenance & Repair, Business Auxiliary Service and Business Support Services are concerned, learned counsel submits that for each of these services necessary/relevant documents/invoices were submitted to the authorities below for the purpose of establishing nexus with the output services but both the authorities below failed to take into consideration or appreciate those documents. Per contra learned Authorised Representative for the Revenue reiterated the findings recorded in the impugned order and prayed for dismissal of Appeal.

4. I have heard learned counsel for the Appellant and learned Authorised Representative for the Revenue and perused the records of the case including the synopsis and case laws submitted by the learned counsel. I have also gone through the decision of the Tribunal in Appellants own case but since it pertains to years prior to 1.4.2011 when the definition of input services was amended therefore it will not be of much help for the Appellant. Earlier the assessee only has to show that the services constitute activities related to business, which stands deleted w.e.f. 1.4.2011 and now it has to be proved that the input services were used for providing output services which have been exported by the assessee. The definition of input service as given in Rule 2(l) ibid is an inclusive definition which means that it is not exhaustive. So far as the Event Management Service and Short Term Accommodation services are concerned, they were rejected on the ground that no tangible documents were produced and these services did not qualify as input service. I have gone through the justification provided by the Appellants as well as the relevant documents, which according to the learned counsel were produced before the learned Commissioner also. In innumerable decisions of the Tribunal it has been held that Event Management Service which is procured for the purpose of business development meetings and events to plan strategy for the future development etc. is qualify as input service and therefore eligible for credit. These kind of events are essential to keep the employees motivated, committed and to foster relationships. Thus these services are actually procured in relation to the business which helps them in improving interpersonal skills, rejuvenate, increase efficiency and to improve their performance in the business. Similarly the short term accommodation was required by the Appellants for its employees’ official visits to other locations for business operations/ meetings and therefore this service is also eligible for credit. The other services viz. storage and packing, Management, Maintenance & Repair, Business Auxiliary Service and Business Support Services were rejected on the ground of either no nexus or description not properly mentioned on the invoices. So far as nexus is concerned I have gone through the records and am satisfied that the Appellants have successfully established the nexus and also that in its absence, the quality and efficiency of the provisions of services exported was going to be adversely impacted. So far as few discrepancies in some of the documents/invoices are concerned it is settled law that any beneficial provision should be interpreted liberally and for a mere procedural lapse, substantive benefit cannot be denied to the Assessee. In the instant matter no serious discrepancy has been noticed or pointed out by the learned Commissioner while rejecting the claim. Incomplete name or description of services appearing in invoices is clerical error and that does not mean that the appellant have not received and used the services and for this reason Cenvat credit/refund cannot be denied. It has also been established by the Appellants that none of the above services were used by the Appellants for the personal use of its employees. Therefore in my view the aforesaid service very well fall within the inclusive definition of input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004 and as such the Appellant are eligible to take refund of accumulated Cenvat Credit of service tax under Rule 5 ibid as exporter of service.

5. The Appeal filed by the Appellant is accordingly allowed with consequential relief, as per law.

(Order pronounced in the open Court on 04.03.2020)

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