At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONORABLE JUSTICE: S.S. GARG
For Petitioner: Nitesh Kancharia, Sr. Manager for B.M.R. & Associates And For Respondents: Naveen Kushalappa, AR
1. Appellants have filed these two appeals against common impugned order dated 19.4.2017 passed by the Commissioner (A), whereby the Commissioner (A) has allowed the departmental appeal and modified the Order-in-Original.
2. Briefly the facts of the case are that the appellant is a wholly owned subsidiary of Hewlett-Packard Global Investment B.V., a company belonging to the Hewlett Packard (HP) Group. The appellant is registered with Service Tax Department for payment of Service Tax under the categories of Business Auxiliary Services and Renting of Immovable Property services. They provide data processing and other IT enabled services for Hewlett-Packard companies worldwide which are exported. The appellant is registered with the Software Technology Park of India (STPI). The appellant have filed two refund claims of unutilized CENVAT credit on various input services under Rule 5 of CENVAT Credit Rules, 2004 for the periods October 2011 to December 2011 and January 2012 to March 2012. After due process, the original adjudicating authority vide Order-in-Original No. 431 & 432/2014 sanctioned the substantial amounts of refunds. Being partly aggrieved by the orders, the Department has filed appeals for rejection and recovery of refund on maintenance of building services for which the original adjudicating authority has sanctioned the refunds under the category of maintenance and repair services. The learned Commissioner (A) allowed the appeal filed by the department vide the impugned order. Aggrieved by the said order, the appellant is before me.
3. Heard both the parties and perused the records.
4. Learned counsel for the appellant submitted that the impugned order allowing the appeal of the Department is wrong and illegal and not sustainable in law as the same has been passed contrary to the provisions of the Central Excise Rules and also by ignoring the binding judicial precedent on the identical issue. He further submitted that the learned Commissioner (A) has not considered the written submissions filed before him. He further submitted that the expenses incurred towards maintenance of building come within the inclusive part of input service as per Rule 2(1) of CENVAT Credit Rules, and duly qualify as eligible input service. In support of this submission, he relied upon the following decisions:
* Xilinx India Technology Services Pvt. Ltd : 2016 (44) STR 635 (Tri.-Hyd.)
* GE India Exports (P) Ltd : 2016 (44) STR 693 (Tri.-Hyd.)
* Marathon Electric India Pvt. Ltd : 2016 (45) STR 253 (Tri.-Hyd.)
* Alliance Global Services IT India (P) Ltd : 2016 (44) STR 113 (Tri.-Hyd.)
* Exide Industries Ltd : 2016 (43) STR 463 (Tri.-Del.)
He further submitted that the expenses towards maintenance of building forms part of rent agreement and there is a nexus between the input service and the service exported. He further submitted that no specific correlation is required between the input and output services which has been accepted by the department also vide Circular No. 120/01/2010 dated 19.1.2010. He further submitted that segregation of refund amounts pertaining to maintenance of building and equipment was already furnished with the refund adjudicating authority.
5. On the other hand, the learned AR reiterated the findings of the impugned order and he further submitted that the appellant has not submitted any proof to substantiate that the service tax paid on maintenance of building has been directly used for the service exported and therefore, the appellant is not eligible for the refund of service tax paid on the maintenance of building.
6. After considering the submissions of both the parties and perusal of the material on record as well as various decisions relied upon by the appellant, I find that the learned Commissioner (A) has rejected refund of the appellant on the ground that the definition of input service as per Rule 2(1) of CENVAT Credit Rules, 2004 has been amended to exclude the words activities relating to business from 1.4.2011 and therefore, the CENVAT Credit pertaining to maintenance of building has been rejected. Further, he has observed that the appellant has not provided any documentary evidence to justify the nexus between the input service of building maintenance and output service. Further, I also find that even after the amendment in the definition of input service, there is no requirement of correlation between the input and output services. Further, in all the decisions relied upon by the appellant cited supra, expenses incurred towards maintenance of building has been considered to be an input ser
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vice as per Rule 2(1) of CENVAT Credit Rules because it is directly connected with the output service. Further, I also find that the expenses towards maintenance of building forms part of the rent agreement and therefore, there is a nexus between the input service and the services exported. In view of my discussions above and by following the ratio of the above decisions, I am of the considered view that the impugned order is not sustainable in law and the same is set aside by allowing both the appeals of the appellant.