Service Tax Appeal No. 1266 of 2010 and others
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 1266 of 2010
(Arising out of Order-in-Original No. 6/2010 dated 23/03/2010 passed by the Commissioner of Central Excise, Bangalore)
M/s. RMZ Infotech Private Limited ….Appellant
The Millenia Tower, B Level, 2, 12-14.no.1 & 2, Murphy Road, Ulsoor, Bangalore-560008
VERSUS
Commissioner Of Central Tax, Bengaluru East
4thfloor, BMTC BUILDING ….Respondent
OLD AIRPORT ROAD, DOMLUR,
BANGALORE - 560071
KARNATAKA
WITH
(i) Service Tax Appeal No. 2311 of 2010 (RMZ Infotech Private Limited)
(Arising out of Order-in-Original No. 41/2010 dated 30/07/2010 passed by Commissioner of Central Excise and Service Tax, SERVICE TAX - BANGALORE)
(ii)Service Tax Appeal No. 3064 of 2011 (Millennia Realtors Private Limited)
(Arising out of Order-in-Original No. 144/2011 dated 26/08/2011 passed by Commissioner of Central Excise and Service Tax, SERVICE TAX - BANGALORE)
(iii) Service Tax Appeal No. 3065 of 2011 (RMZ Infotech Private Limited)
(Arising out of Order-in-Original No. 139/2011 dated 24/08/2011 passed by Commissioner of Central Excise and Service Tax, SERVICE TAX - BANGALORE)
(iv) Service Tax Appeal No. 25054 of 2013 (Millennia Realtors Private Limited)
(Arising out of Order-in-Original No. 03/2012 dated 27.09.2012/28.09.2019 read with corrigendum dated 13/12/2012 passed by Commissioner of Central Excise and Service Tax,
BANGALORE)
(v)Service Tax Appeal No. 25055 of 2013 (RMZ Infotech Private Limited)
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(Arising out of Order-in-Original No. 02/2012 dated 26.09.2012/28.09.2012 read with corrigendum dated 13/12/2012 passed by Commissioner of Central Excise and Service Tax,
BANGALORE)
(vi)Service Tax Appeal No. 20758 of 2014 (RMZ Infotech Private Limited)
(Arising out of Order-in-Original No. 05/2013-14 dated 14/10/2013 passed by Commissioner of Central Excise and Service Tax , SERVICE TAX (Adjudication) -
BANGALORE)
(vii)Service Tax Appeal No. 20053 of 2015 (Millennia Realtors Private Limited)
(Arising out of Order-in-Original No. 47/2014 dated 18/10/2014 passed by Commissioner of Service Tax-I , BANGALORE)
(viii)Service Tax Appeal No. 20325 of 2016 (RMZ Infotech Private Limited)
(Arising out of Order-in-Original No. 27/2015 dated 26/11/2015 passed by Commissioner of Service Tax, SERVICE TAX-I - BANGALORE)
APPEARANCE:
Shri K.S. Ravishankar and Mr. N.Anand,Advocates for the Appellant Shri K.B.Nanaiah, Authorized Representative for the Respondent
CORAM:
HON'BLE MR. S.K. MOHANTY, JUDICIAL MEMBER HON'BLE MR. P. ANJANI KUMAR, TECHNICAL MEMBER Final Order No. 20826-20834 / 2021
DATE OF HEARING : 05/11/2021
DATE OF DECISION: 05/11/2021
PER: S.K. MOHANTY
The issue involved in all these appeals is identical and accordingly, the same are taken up for hearing together and a common order is being passed.
2. Briefly stated, the facts of the case are that the appellants herein are engaged in providing various taxable services, defined under the provisions of the Finance Act, 1994. In the capacity of service providers of different category of taxable services, the appellants avail CENVAT credit of Central
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Excise duty paid on the inputs and service tax on the input services. During the period from June 2007 to September 2013, the appellants had availed CENVAT credit on the inputs and input services, which were sought to be disallowed by the Department on the ground that the same are not confirming to the definition of either „input" or „input service", defined under Rule 2(k) and Rule 2(l) respectively of the Cenvat Credit Rules, 2004. The show cause proceedings initiated by the Department culminated in the adjudication orders (for short, the „impugned orders"), wherein the Original Authorities had confirmed the proposed CENVAT demand along with interest and also imposed penalties on the appellants. Feeling aggrieved with the impugned orders, the appellants have preferred these appeals before the Tribunal.
3. Sh. K.S. Ravishankar, learned Advocate appearing for the appellants submitted that the period of dispute involved in these cases relate to both pre-amended and post-amended definition of Input Service contained in Rule 2(l) ibid. He further submitted that the appellants did not avail CENVAT credit in respect of inputs after 01.04.2011. In the appeal memorandum, the appellants had furnished the detailed list of disputed input services and their uses by the appellant in the course of providing the output service. The list is extracted herein below:
| Sl. No. |
Input Service Received by the noticee |
Details of the usage by the notice in the course of providing output services |
| 1 |
Air travel agent services |
This service is used for purchase of air tickets for business travels to employees and directors of the company. Further it is submitted that all the air travel done by the employees and directors of the noticee-company and is exclusively for business purposes. No personal travel is incurred by the company. |
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| 2 |
Banking and other financial services |
The noticee needs finance for its business activities and obtains loans and other financial services from various banking and other financial services. The service tax charged by the service providers is availed as CENVAT credit. This service is also specifically covered in Rule 2(l) as input service. |
| 3 |
Brokerage and commission agent services |
The noticee engages the services of real estate brokers/agents who render services to the noticee in getting tenants/customers for the noticee. This service is directly connected and concerned with rendering of output taxable service of renting of immovable property. |
| 4 |
Building Insurance |
The noticee is the owner of various immovable properties in Bangalore and also other places in India. The immovable properties are the assets which are rented out by the noticee and which is liable for payment of service tax. The noticee being the owner of the immovable properties they need to be insured to safeguard from any kind of accidents, risks, losses, etc. such as fire, theft, burglary, damage, etc. In order to insure the immovable properties/buildings, the noticee has obtained insurance coverage from the insurance company. The insurance companies have rendered building insurance service to the noticee which is very essential for rendering of taxable service. Hence, the building insurance service is an eligible „input service' as per Rule 2(l) of the CENVAT Credit Rules, 2004. |
| 5 |
Chartered Accountant service |
The noticee, being a private limited company and also being subject to various Statutes both Central and State and statutory compliance required to fulfilled thereunder, receives various professional services from the practicing Chartered Accountants who provide services to the noticee enabling them to discharge their |
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|
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duties and obligations under the Companies Act, Income tax Act, Finance Act, State VAT laws, labour laws, etc, etc. The service tax charged by the CAs are availed as CENVAT credit as input service. This service is also specifically covered in rule 2(1) as input service. |
| 6 |
Courier service |
The noticee has its operations i.e., immovable properties in various places within the State of Karnataka and outside the State. They also have marketing agents outside the country. The courier services received by the noticee to send various documents, agreements, bills, receipts, vouchers, etc., from one place to another both internally as also with customers/vendors/tenants, etc. This service is used for providing output service since while rendering the output service various documents legal or business, etc., are required to be sent or exchanged. Hence, this is covered under the main limb of the definition in rule 2(l). In any case this service would qualify to be 'input service‟ in terms of inclusive part of the definition. |
| 7 |
Credit card, debit card or other card services |
These are in the nature of financing services received from banking and other financial institutions wherein the noticee has provided credit cards to the Senior Management personnel who use the card for procurement of goods and services required for conducting the business activities of the noticee or to effect payment for official matters on immediate basis to avoid delay in business operations. This is only to ensure that delays are avoided and for smooth functioning in carrying on day-to-day business activities of the noticee. This service is akin to financing and this service is specifically covered in rule 2(l) as input service. |
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| 8 |
Event management service |
It is submitted that noticee organizes business events/exhibitions/business fairs, etc., wherein they promote their business and to attract prospective customers/tenants and to advertise and promote their service-product i.e., space office and residential which would eventually further the business interest of the noticee and their business is enhanced. This is akin to advertisement services. This service is akin to advertising and sales promotion and is specifically covered in rule 2(l) as input service. |
| 9 |
Foreign exchange broker service |
The noticee has received this service towards purchase and sale of foreign currency for the purpose of business travels by the director and employees. These services are mainly received from Thomas cook and Poundwise ForexPvt Ltd. |
| 10 |
General insurance |
The noticee is a private limited company and is having various types assets/properties i.e., fixed, current, intangible assets in addition to buildings. It is submitted that these assets needs to be insured to safeguard from any risk, accident, etc., such as fire, burglary, etc., and these properties are business properties which needs to be insured in the ordinary course of business. The insurance services received by the noticeetowards insurance of various assets/properties of the noticee are entitled and eligible for CENVAT credit. |
| 11 |
Legal consultancy service |
The noticee is in the real estate business which involves purchase and sale of immovable properties, construction of properties, renting of immovable properties, etc., and these activities involve legal compliance under the real estate laws such as Transfer of Property, renting, leasing, etc., and also receives legal services from advocates in |
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|
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representing their case under the Income tax Act, Sales Tax, Service tax, etc. The noticee receives services of lawyers and advocates and the service tax paid including under RCM is availed as CENVAT credit as "input service". This service is specifically covered in rule 2(l) as input service as "legal service". |
| 12 |
Management, Maintenance or Repair Service |
It is submitted that noticee being engaged in real estate business has huge capital asset including computers, lifts/escalators, motor vehicles, office equipment, immovable properties, etc., which needs to be maintained and managed and repaired. The noticee receives various service providers who provided MMR service and charges service tax. The noticee has availed the CENVAT credit of the same as 'input service. This is an input service for providing output services such as renting of immovable property, MMR and other services. |
| 13 |
Manpower recruitment agency service |
The noticee requires various manpower viz., skilled and unskilled personnel in order provide taxable output services including renting of immovable property, MMR service, etc. In order procure manpower for the purpose of carrying on the business, the noticee has received the services of manpower recruitment agency who have procured the services of manpower recruitment or supply. These services are in respect of business of the noticee. Hence, these services qualify to be 'input service' as per rule 2(1). |
| 14 |
Membership and subscription service |
The noticee is a member for certain clubs and associations and these membership services were used for the purpose of business meetings and business conferences. Hence, these services were used entirely for business/official purposes and no personal expenditure is incurred in |
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|
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this regard. Hence, this service is essential for the conduct of business of the noticee. |
| 15 |
Renting of immovable property service |
The noticee has taken one of their business premises for rent and the service provider has charged service tax. Since this service is used for conducting of business of the company, the same is entitled for CENVAT credit. |
| 16 |
Telecommunication service |
The noticee has received telecommunication services such as telephone, mobile, internet, etc., for the purposes of their business. |
| 17 |
Management consultancy service |
Retainer fee paid for consultation on Financial structure of loans and advances Land operations management. |
3.1 Learned Advocate also submitted that the disputed services are falling within the scope and ambit of "input service" defined under both the un- amended and amended definition, defining the said expression in Rule 2(l) ibid. With regard to the period up to 31.03.2011, he submitted that the phrase 'activities relating to business' was specifically finding place in the inclusive part of the definition of input service and that since the appellants had incurred the expenditure for procuring the input services for utilization in providing the output service(s), their case should be categorized under such phrase for consideration as input service for the purpose of availment of Cenvat credit of service tax paid thereon. With regard to avalment of Cenvat on the input services for the period after 01.04.2011, he submitted that the post-amended definition of input service is broad in nature and includes all services used by a service provider for providing the output service and only itemized certain services, which fall under the excluded category. Thus, he submitted that since the disputed services are not falling
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under the excluded category of services under the definition, the same should be considered as input service and accordingly, the benefit of Cenvat credit cannot be denied to the appellants. As regards denial of CENVAT benefit on inputs, the learned Advocate has relied upon the decision of this Tribunal in the case of M/s Millennia Realtors Private Limited vs. CCE, Bangalore [2020-TIOL-435-CESTAT-BANG] and Golflinks Software Private Limited vs. CCE, Bangalore [2018-TIOL-2877-CESTAT-BANG], to state that CENVAT benefit provided under the statute cannot be denied to the appellant.
4. On the other hand, Shri K.B. Nanaiah, learned AR appearing for the Respondent/Revenue reiterated the findings recorded in the impugned order. He further submitted that since the disputed services are not confirming to the definition of either "Input" or "Input Services", defined under the Cenvat statute, denial of the CENVAT benefit by the Original Authority is in conformity with the statutory provisions and findings recorded by the Original Authority, cannot be disturbed at this juncture.
5. Heard both sides and perused the records of the case.
6. The Department in this case has not objected to the fact that the appellant did not avail any CENVAT credit on input after 01.04.2011. Thus, in absence of any specific observations being made by the Department to this effect, we are confining ourselves to the issue with regard to the Cenvat credit availed by the appellants on inputs for the period prior to 01.04.2011.The definition of "Input" contained in Rule 2(k) ibid provided that all goods, excepting the excluded category of goods, should be considered as input for the purpose of availment of the CENVAT benefit. On perusal of the case records vis-à-vis the definition clause, we find that the
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disputed inputs in this case were not falling under the excluded category of goods itemized in the said Rule. Hence, in our considered view, the disputed goods utilized by the appellant prior to 01.04.2011 should be considered as
"Input" for availing the benefit of CENVAT credit. We find that this Tribunal in the case of M/s Millennia Realtors Private Limited (who is also an appellant in this case), has extended the CENVAT benefit on the similar inputs availed by the appellant, considering the same as input in terms of the definition provided under Rule 2(k) ibid.
7. With regard to the availment of CENVAT credit on the input services prior to the period 01.04.2011, the definition of "Input Service" contained in Rule 2(l) ibid provided that "activities relating to business" should be considered as input service for the purpose of availment of the benefit of CENVAT facility. In this case, the Department has not raised any objection that the appellants had availed the input services for accomplishing their business purpose. Hence, under such circumstances, denial of CENVAT benefit on the input services availed by the appellant prior to the period 01.04.2011 cannot be denied solely on the ground that the disputed services are not categorised as input services.
8. Insofar as availment of CENVAT credit on the input services for the period after 01.04.2011 is concerned, the definition clause provided under Rule 2(l) ibid clearly provided that any service used by a provider of taxable service for providing an output service should be considered as input service. The definition clause has provided the excluded category of services, which cannot be considered as input service. On careful examination of the case records, we find that the list of disputed services itemized in the SCNs as well as in the impugned order are not confirming to the excluded category of
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services finding place in the definition clause. Thus, denial of CENVAT benefit on the disputed services availed by the appellants after 01.04.2011 by the authorities below is not legal and proper and accordingly, in our view, the impugned orders are liable to be set aside.
9. The learned AR submitted that the appellant had not provided any evidence to show that some of the disputed services are used for the construction activities. However, on a query from the Bench as to whether the Original Authority had recorded such findings in the impugned order, he replied negatively.
10. In view of the foregoing discussions and analysis, we do not find any merits in the impugned orders, insofar as the adjudged demands were confirmed on the appellant, holding that they should not be eligible for the CENVAT benefit. Therefore, by setting aside the impugned orders, all the appeals are allowed in favour of the appellants, with consequential relief, if any, as per law.
(Dictated and pronounced in open court)
(S.K. MOHANTY)
JUDICIAL MEMBER
(P. ANJANI KUMAR)
TECHNICAL MEMBER
Pk
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