M/s. Trimble Information Technologies India Pvt. Ltd. vs Commissioner Of G.S.T. And Central Excise

The assessee, being aggrieved by the Order-in-Appeal No. 353/2019 (CTA-II) dated 30.12.2019 passed by the Commissioner of G.S.T. and Central Excise (Appeals-II), Chennai, has filed the present appeal and the only issue to be decided is the denial of refund claim under Rule 5 of the CENVAT Credit Rules, 2004 of the unutilized credit on the inputs and input services used for providing output services.

It is the case of the appellant that the Adjudicating Authority vide Order-in-Original No. 83/2019(R) dated 22.08.2019 had granted substantial refund, but however, rejected a part of it. Aggrieved by the partial rejection, the appellant preferred first appeal, but however, the First Appellate Authority vide order impugned herein allowed refund only in respect of certain services while rejecting the appeal in respect of the other services. Aggrieved by the same, the assessee has filed the present appeal before this forum.

When the matter was taken up for hearing, Shri Joseph Prabhakar, Learned Advocate, appeared for the assessee-appellant and Shri Arul C. Durairaj, Learned Departmental Representative, appeared for the Revenue.

4.1 At the outset, Learned Advocate for the appellant drew my attention to the Statement of Facts [Sl. No. 10] of the Appeal Memorandum and submitted that the appellant is not contesting the disallowance of CENVAT Credit in respect of Reimbursement Charges, excess Service Tax availed and Duplication of credit/invoice. The description of the services being contested for which CENVAT Credit was disallowed along with the respective amounts are captured in the table below, for the sake of convenience:

Sl. No.

Description of service for which CENVAT Credit was alleged to be ineligible

Amount (in Rs.)

1.

Freight Charges

1,485/-

2.

Plant Rental

5,040/-

3.

Cleaning Charges

43,377/-

4.

Pest Control Services

4,528/-

5.

Payment made under RCM

20,65,299/-

4.2 Learned Advocate for the appellant further submitted that the erroneous rejection of refund is no more res integra and has been laid to rest by the decisions/orders of various fora.

Per contra, Learned Departmental Representative for the Revenue relied on the findings in the impugned order.

I have carefully considered the rival contentions and have gone through the various decisions/orders relied upon during the course of hearing.

As pointed out by the Learned Advocate for the appellant, since the appellant is not contesting the denial of CENVAT Credit in respect of Reimbursement Charges, excess Service Tax availed and Duplication of credit/invoice, no finding is given in this regard.

8.1 Following are the services against which the CENVAT Credit availed has been rejected and are being contested by the appellant :

• Freight Charges

• Plant Rental Charges

• Cleaning Charges

• Pest Control Services

• Payment made under RCM

8.2 On going through the decisions/orders relied upon by the Learned Advocate, I find the contentions of the Learned Advocate for the assessee to be correct as regards the denial of CENVAT Credit availed on some of those services, which has been held to be bad. The same is analysed below.

With regard to the denial of CENVAT Credit on Freight Charges, the appellant has claimed that the above charges were incurred on a day-to-day basis for carrying the inputs used for providing output services and these are the charges paid to the vendor for inward transportation. In any case, Freight Charges are included in the inclusive part of the definition of "input service" under Rule 2 (l) of the CENVAT Credit Rules, 2004 and hence, the denial by the lower authorities is bad. The impugned order to this extent is set aside and this ground is allowed.

On the Plant Rental Charges, it is seen that since services of renting of equipment for organizing events are allowed as valid input service, the same logic should apply here and accordingly, in principle, the denial of CENVAT Credit is held bad. The Delhi Bench of the CESTAT in the case of M/s. HCL Technologies Ltd. v. C.C.E., Noida reported in 2015 (40) S.T.R. 369 (Tri. - Del.) has held so. A perusal of the Order-in-Original as well as the impugned Order-in-Appeal makes it clear that there is no specific discussion on this issue. In view of this, this issue is remanded to the file of the Adjudicating Authority who shall verify all such details that may be furnished by the appellant and then pass appropriate order in the light of the directions/guidelines laid down by the Delhi Bench in the case of M/s. HCL Technologies Ltd. (supra). This ground is allowed by way of remand. All the contentions as far as this ground is concerned are left open.

11.1 With regard to Cleaning Charges, in the following decisions/orders it has been held that cleaning services are essential for providing output services and therefore, the same would qualify as input service and hence eligible for refund :

(i) M/s. RR Donnelley India Outsource Pvt. Ltd. v. Asst. Commr. of Service Tax, Commissioner (Appeals-I) [Orders-in-Appeal No. 211-222/2017 dated 26.04.2017];

(ii) M/s. Alliance Global Services IT India Pvt. Ltd. v. The Commissioner, C.C.E. & S.T, Hyderabad-IV [2017 (49) S.T.R. 235 (Tri. - Hyd.)];

(iii) M/s. HCL Technologies Ltd. v. Commr. of Cus., C. Ex. and S.Tax, Noida [2015 (40) S.T.R. 1124 (Tri. - Del.)]

11.2 The ratio laid down in the above decisions/orders are squarely applicable to the facts of the case on hand and hence, following the above ratio, the denial of CENVAT Credit on this service is bad. To this extent, the impugned order is set aside and this ground of the appeal is allowed.

12.1 On Pest Control Charges, the assessee has claimed that this issue is akin to Cleaning Services, which is very much essential to keep the business premises safe and clean and hence, the denial is clearly uncalled for. In this regard, the following decisions/orders relied on, are apt:

(i) M/s. RR Donnelley India Outsource Pvt. Ltd. v. Asst. Commr. of Service Tax, Commissioner (Appeals-I) [Orders-in-Appeal No. 211-222/2017 dated 26.04.2017];

(ii) M/s. Alliance Global Services IT India Pvt. Ltd. v. The Commissioner, C.C.E. & S.T, Hyderabad-IV [2017 (49) S.T.R. 235 (Tri. - Hyd.)];

(iii) M/s. HCL Technologies Ltd. v. Commr. of Cus., C. Ex. and S.Tax, Noida [2015 (40) S.T.R. 1124 (Tri. - Del.)]

12.2 Following the above ratio, the impugned order to this extent is set aside and this ground stands allowed.

13.1 With regard to the denial of CENVAT Credit in respect of payment made under RCM, Learned Advocate for the appellant submits that the issue is no more res integra as the same is settled by the decisions/orders of various High Courts/Tribunals. He referred to an order of the co-ordinate Bangalore Bench of the Tribunal in the case of M/s. Robert Bosch Engineering and Business Solutions Ltd. v. Commissioner of Central Excise, Customs & Service Tax, Bangalore-LTU [2018-TIOL-1003-CESTAT Bangalore] in Service Tax Appeal No. 26925 of 2013 & ors. vide Final Order Nos. 23114 to 23130 of 2017 dated 08.12.2017, wherein the co-ordinate Bench has considered various decisions and concluded as under:

"7 (iii) Credit availed in particular quarter and payment made in next quarter Learned consultant submits that in the quarter October - December 2008, the refund of CENVAT credit was denied for the reason that the appellant did not make the payments for these input services within the quarter under consideration. It is his submission that the payments for these services were made in the subsequent quarter and hence, such refunds would be allowable in the subsequent quarter but the same has not been considered.

We note that even though the payment was not made by the appellant for the services within the quarter for which the refund was claimed, the same has been made in the subsequent quarter. If that is so, then it becomes only a procedural lapse for which the substantial benefit of refund cannot be denied to the appellant. Hence, the original authority is directed to verify the fact of payment for such services in subsequent quarter and then allow the refund."

13.2 Following the above ratio, this issue is remanded to the file of the Original Authority who shall verify the payment following the directions given in the above order and then pass an appropriate speaking order in accordance with law.

In the result, the appeal stands partly allowed and partly remanded, on the above terms.

(Order pronounced in the open court on 09.08.2021)