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2016 (6) TMI 680 - CESTAT HYDERABAD

2016 (6) TMI 680 - CESTAT HYDERABAD - TMI - Refund - Export of software services by 100% EOU - eligibility of various input services - From January 2012 to March 2012 - Held that:- the disputed input services as aforesaid, disallowed by the lower authorities, will merit consideration as input services for the purposes of Rule 2(l) of the CENVAT Credit Rules 2004, as amended w.e.f. 01/04/2011 and that these services have clear nexus with the output service provided by the appellant and are very m .....

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of India (STPI) and have service tax registration under the category of Information Technology Software Services (ITSS). They are aggrieved by the denial of refund to the extent of ₹ 16,88,981/- of service tax paid on some input services availed by them. The period involved in the appeal is January 2012 to March 2012. The main grounds on which the credit/refund denied with respect to certain input services availed by the appellant are absence of evidence of usage for business purpose, not .....

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g the period January 2012 to March 2012, the following relevant portion of the definition of input service vide Rule 2(l) of the CENVAT Credit Rules 2004, as amended w.e.f. 01/04/2011, was applicable to their case:- (l) input service means any service, - (i) used by the provider of output service for providing an output service; .. . 3. The summary of disallowances as listed out by the counsel in the appeal is as under:- Sl. No. Particulars Refund rejected (Rs.) i. Air Travel Agent s Services 28 .....

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Internet/Telecommunication Services 1,53,379 Xiii Sponsorship Services 97,850 Xiv Club or Association Services 5,150 Xv Legal Consultancy Services 27,058 Total 16,88,981 4. In this regard, it is found as follows:- i. Air Travel Agent s Services: While conceding that this service is an eligible input service for exporting the taxable output service, the lower authority has disallowed refund of the credit thereof on the grounds that the appellant could not submit any material evidence that the se .....

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of the refund is not justifiable. ii. Banking and Other Financial Services Refund of credit on these services has been disallowed by lower authority on the ground that no connectivity has been established to conclude that the said services are used in relation to export. The appellant has adverted that these services were received by them to provide the employees the foreign currency on overseas tours to meet clients and hence, directly connected with the rendering export of output service. The .....

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ude that the said services are used in relation to export. The appellant has adverted that these services were received by them in connection with their audit and issue of certificate by practicing Chartered Accountant and that these services will fall under the ambit of activities like accounting and audit which form part of the inclusive portion of the definition of input service at Rules 2(l) of the CENVAT Credit Rules 2004. I find merit in the submissions of the appellant and in consequence, .....

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nd business communication training services and that input services like coaching and training exhibition are part of input service. In the circumstances, I hold that the denial of the refund for this input service is therefore not justifiable. v. Courier Services The refund of the credit on this input service has been disallowed by the lower authority on the ground that absence of any evidence of its usage for business purpose. The appellant has adverted that the courier services are required f .....

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nput service used in providing the output service. In the circumstances, I hold that the denial of the refund for this input service is not justifiable. vi. Custom House Agent s Services The lower authorities have disallowed refund of the credit on this service on the ground that there is lack of clarity as to the purpose for which these charges are paid and in which manner these services are related to output service exported. The appellant has adverted that the services provided by Custom Hous .....

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oftware Services. The lower authority while conceding that the assessee is eligible for refund of the credit on this service, has however disallowed an amount of ₹ 4,635/- without assigning any reason thereof. The appellant has adverted that the impugned credit amount has been incurred by them on the invoices raised by M/s. TenXLabs Technologies Pvt. Ltd. towards hosting charges availed by them to access web based application and that the same are directly related to the export of their ou .....

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ion to day-to-day function of the office including security, cleaning and housekeeping services and an indispensable services being directly connected to office premises. They have relied upon the ratio of Tribunal s order in the case of CCE Vs. CE Gloves India Ltd. [2013-TIOL-1975-CESTAT-BANG.]. In the circumstances, I find merit in the above submission and I hold that the denial of the refund for this input service is not justifiable. ix. Management or Business Consultant s Services The lower .....

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e submission of the appellant. These services are very much required to enhance efficiency and productivity of the organization and to ensure compliance with tax and regulatory requirements. I therefore hold that the denial of the refund for this input service is not justifiable. x. Manpower Recruitment or Supply Agency s Services The lower authority while conceding the eligibility of this input service both for taking credit and refund thereof, has however disallowed an amount of ₹ 2,47,8 .....

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not justifiable. xi. Renting of Immovable Property Services The lower authority, while inter alia holding that the appellants are rightly eligible for claiming refund of the service tax paid on renting of immovable property, has however disallowed an amount of ₹ 1,19,160/- pertaining to rent of fit outs and has also held that input services should have been used for providing the output services and input services though used by the service provider would render themselves ineligible if th .....

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owner along with the premises as part of the renting services; that this is an essential service without which the appellant cannot export services; that any view that no furniture and fixtures are required for rendering the output services is devoid of merit. In the instant case, I find that the appellants were a provider of output service under the category of Information Technology from their premises at Madhapur, Hyderabad. It is not disputed that the said output service was provided by the .....

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ers such as this appellant for housing their employees and equipment, without which they cannot provide the export service they set out to do. It is also noted that in this case, the service pertaining to renting of fitouts will have to be necessarily considered as a naturally bundled services with the service of renting of immovable property, for the purposes of Section 66F of the Finance Act, 1994. In view of the above, I am of the considered opinion that the service of renting of fitouts avai .....

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facilities, telephone connections and mobile phone facilities are required in order to export the software services electronically, communicate with the customers and the vendors and hence are essential for the functioning/business of the company that is rendering of the output services. These are essential lifelines for the efficient working of any organization and are very much used for providing output service. I find merit in the above submissions of the appellant. In the circumstances, I ho .....

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