Whether services like rent on car parking, cafeteria, terrace of building etc., treated as input service?

PJ/Case law/2012-13-1551

Case:- C.S.T., Bangalore Vs. Mercedes Benz Research & Development India (P) Ltd.

Citation:- 2013(30) S.T.R. 257 (Tri.-Bang.)

Issue:- Whether services like rent on car parking, cafeteria, terrace of building etc., treated as input service?

Brief Facts:- The appellant is a 100% EOU registered with STPI. They claimed a refund of unutilized Cenvat credit for the month of June 2008 in terms of Notification No, 5/2006-C.E. (N.T.), dated 14-3-2006. The original authority sanctioned refund and rejected the some balance amount. Against rejection of part of the refund claim, the assessee filed an appeal before the Commissioner (Appeals) who allowed the appeal with consequential benefit to the appellant. Aggrieved by the order-in-appeal revenue preferred an appeal before Tribunal.

Appellant’s Contention:- The appellant reiterating the grounds of appeal submits that the party has not even attempted to explain how exactly the impugned services were used in providing the output taxable services which have been exported by them. It has also not been proved that the condition in Clause 5 of Notification 5/2006-C. E. (N.T.) dated 14-3-2006 stands fulfilled.

Respondent’s Contention:- The respondent strongly supports the order of the Commissioner (Appeals). In this regard, he relies on the decision of the Tribunal in the case of Commissioner of Central Excise, Bangalore v. M/s. RSA Security India Pvt. Ltd.reported as [2012-TIOL-485-CESTAT-BANG.].

Reasoning of Judgment:- The Tribunal carefully considered the submissions from both sides and perused the records and finds that the original authority denied refund of credit of service tax attributable to rent paid on car parking, cafeteria and terrace of the building. He also denied refund of credit of service tax relating to in-house training of professionals. He also denied refund of credit of service tax involved in using the services of professionals like chartered accountant in preparation of returns/certificates in the course of their business activities. The Commissioner (Appeals) has held that the credit on these input services are available in the light of Board's Circular No. 120/01 /2010-S.T., dated 19-1-2010.

The Tribunal also find that the assessee has claimed that they have engaged the services of professionals for calculation of professional tax, income tax etc. These services are obviously in connection with the business activities of the assessee. Original authority denied credit on service tax attributable to 'lunch and snacks'. Learned CA clarified that the service tax involved relates to 'Outdoor Catering Services' and that during the relevant time they had around 400 employees working in the project. The credit also stands denied in respect of in-house training given to the professionals employed in their company. It is not conceivable that a company which has employed more than 400 workers has taken the premises on rent excluding car park, cafeteria which are necessarily part and parcel of their business premises. In the facts and circumstances of the case, there is no justification to say that terrace of the building should not be treated as part of the business premises and the service tax attributable to the terrace should be disallowed.

The Tribunal finds that Similarly, the 'Outdoor Catering Services' the training services, and the professional services used by the assessee are all deserve to be treated as 'input services' in relation to their exports especially when they are 100% EOU coming under STPI scheme. The grounds of appeal in the department's appeal do not indicate any reason to question the validity of the finding of the Commissioner (Appeals) that these services should be treated as 'input services' in relation to the 'output services' rendered by the assessee. It merely says that the assessee has not made any attempt to prove that they are related to 'output services'. Further, the ground relating to non-examination of fulfillment or otherwise of Clause 5 of Notification was not a ground based on which original authority has rejected the refund claim. It is not the case of the department that the said condition has not been fulfilled.

In view of the above, Tribunal did not find any valid reasons to interfere with the order of the Commissioner (Appeals). Appeal is therefore rejected

Decision:- Revenue’s appeal rejected.

Comment:- The analogy of this case is that services like rent on car parking, cafeteria, terrace of building, etc are necessary part and parcel of business premises of company employing 400 workers. Similarly Outdoor Catering services, training services and professional services also deserve to be treated as input service in relation to export of 100% EOU under STPI Scheme and refund should be admissible thereon.

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PJ/Case law/2012-13-1551

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