2012 (11) TMI 999 - AT - Service Tax

Refund claim - Notification No. 05/2006 CE - denial of the refund already granted by the original authority is on the ground that two of the services viz. management consultant services and maintenance or repair services (in connection with DG sets) are not input services in relation to the services rendered by them viz. ITSS Held that - management consultant service was utilized for rendering the business with efficiency and it was prerequisite to render the business efficiently especially to cater to the export market and therefore, should be treated as input services - services could be treated as input services in respect of services rendered by the appellant - waiver of pre-deposit allowed

Summary

Issues:
Refund claim under CENVAT Credit Rules 2004 - Denial of refund on grounds of specific services not being considered as input services.

Analysis:
The case involved a refund claim of Rs. 24,36,191 under Rule 5 of the CENVAT Credit Rules 2004 for the period April 2008 to June 2008. The original authority sanctioned a refund of Rs. 17,17,447 but rejected the balance of Rs. 7,18,744. The Commissioner, in an Order-in-Revision, held that a portion of the sanctioned refund was not admissible and ordered the recovery of Rs. 13,35,766. The denial of the refund was based on the contention that certain services, specifically management consultant services and maintenance or repair services related to DG sets, were not considered input services in relation to the services provided by the appellant.

The appellant argued that the maintenance of DG sets was crucial for uninterrupted power supply, which was essential for their business operations, especially for catering to the export market. Similarly, they contended that management consultant services were necessary for efficient business operations, particularly for enhancing efficiency to serve the export market. The appellant asserted that both these services should be categorized as 'input services' as they were directly linked to their business activities.

On the other hand, the Senior Departmental Representative (SDR) supported the Commissioner's findings and reasoning in the Order-in-Revision. After considering the submissions from both sides, the Tribunal was inclined to agree with the appellant's representative that the disputed services could indeed be classified as 'input services' concerning the services provided by the appellant. Consequently, the Tribunal ordered a waiver of the recovery amount of Rs. 13,35,766 and stayed the recovery process until the appeal was disposed of, indicating a favorable stance towards the appellant's arguments regarding the classification of the services in question.