2014 (3) TMI 695 - CESTAT BANGALORE

Cenvat Credit - scope of input services i.e. (i) group health insurance scheme as regards employees, (ii) services utilised for construction, maintenance or repair or renovation of Global Training Centre, (iii) services used in respect of hostel, food court, gym etc - Demand of service tax in respect of information technology software services received from overseas sub-contractors to overseas branches of the appellant - reverse charge - Held that:- if the insurance policy covers persons other than employees and no contribution is required from the employees towards such coverage, the service tax paid on insurance premium to that extent on a proportionate basis will have to be reversed. It cannot be said that the insurance provided to the parents or family towards all the employees is relatable to output services provided by the appellant. - matter remanded to verify and limit the demand to the extent of service tax payable on insurance premium attributable to families of employees, if other family members are covered and expenses are borne by the appellant. - Decided partly in favor of assessee.

As regards global training centre, in view of the fact that learned counsel has made vehement submission that the appellant was providing commercial training and coaching service and the premises of global training centre is often used for conducting commercial coaching service on which service tax is paid, credit would be admissible since it becomes a premises of the service provider for providing the service of commercial training or coaching centre. At this juncture, it becomes necessary to note the fact up to 1.4.2011, setting up of a premises of output service provider was also an activity for which services used were eligible for credit.

As regards hostel and gym, in respect of which various services received had been claimed to be input service, it is quite clear from the definition that both of them cannot be considered as premises from where the service is provided or an office relating to the premises from where service is provided.

Liability of service tax - reverse charge - information technology software services received from overseas sub-contractors to overseas branches - Held that:- If the service has been rendered in USA or Canada received by the branch office of the appellant in USA or Canada and utilised by the branch office at USA or Canada and paid for out of the foreign exchange earned, unless the Revenue is able to show that the service has been received in India, or the benefit of service rendered abroad has been received in India, the tax, in our opinion, would not be payable.

It is not the case of the appellant that money was not paid. It is the case of the appellant that whatever consideration is received for services rendered by them abroad goes into EEFC account and the appellant is entitled to spend 75% of such receipts in EEFC account for payments abroad. Therefore the fact that appellants have made payment from EEFC account and not from funds in the hands of Infosys in India would go to show that whatever payments were made were made from export earnings only. This would mean that services were paid for by the earnings abroad - Following the decision in the case of KPIT Cummins Infosystems Ltd. [2013 (12) TMI 792 - CESTAT MUMBAI], decided in favor of assessee.

Levy of penalty and extended period of limitation - Held that:- In all these cases, wherever there is demand for service tax, the appellant would be eligible for the benefit of CENVAT credit also and therefore it cannot be said that there was any intention to evade payment of duty. - the demands wherever are sustainable in our opinion and where we have held so, would be only to the extent of denial of CENVAT credit within the normal period of limitation with interest but penalties are not sustained. - Decided partly in favor of assessee.