THE appellant is engaged in the provision and export of various services namely Business Auxiliary Services, Business Support Services, Manpower Recruitment Agency and Information Technology Software Services. Against the export of services, they have filed various refund claims of accumulated Cenvat Credit of various services under Rule 5 of CCR, 2004 r/w notification No. 5/2006-CX(NT).
In adjudication, the CCE (A), Mumbai disallowed the Cenvat Credit in respect of services namely Health Club and Fitness Center, Transport of Goods by Road & Electricity Expenses on the ground that these services are not falling under the definition of input service and the same has no nexus with the export of service. Aggrieved by this order denying the refund of Rs.3,75,513/- the appellant is before the CESTAT. The period involved is prior to 01.04.2011.
The appellant submitted that in their own case the Commissioner (A) had allowed the CENVAT credit in respect of the said services and granted refund and which order was accepted by the Revenue and, therefore, he could not have taken a different view. Reliance is placed on the decisions in Siddharth Tubes Limited – 2004-TIOL-1071-CESTAT-DEL & Radhasoami Satsang Vs. CIT – 2002-TIOL-745-SC-IT.
It is further emphasized that the appellant is a BPO and in absence of the impugned services, the same would adversely impact the quality and efficiency. Inasmuch as Fitness service is essential particularly for a BPO service provider and the Transport service is for carrying out day-to-day activities of the business like transportation of equipment viz. computers etc. Further, the allegation by the Commissioner that transportation is used for household goods of the employees is baseless and without any evidence. Further, electricity expenses are towards the services provided by the landlord for common area maintenance which includes repairs to facilities, maintenance of the premises, cleaning services, electricity and other related services which have been accounted under the heads like repairs and maintenance, electricity expenses in the book of accounts. As all the above services are undisputedly used by the appellant in relation to their business activities only, therefore,the same is an input service. Reliance is also placed on the decisions cited as 2009-TIOL-449-HC-MUM-ST, 2010-TIOL-745-HC-MUM-ST, 2011-TIOL-1675-CESTAT-MUM, 2011-TIOL-95-CESTAT-MUM, 2008-TIOL-383-CESTAT-AHM.
The AR submitted that the services have no nexus with the export services and that in the earlier proceedings, refund in respect of health club and fitness center was, in fact, rejected and the other two services were never a part of the earlier proceedings.
The CESTAT inter alia observed –
“…In the present case, the appellant is providing the BPO services. In the BPO services the major involvement is manpower who are required to perform their duties on 24×7 basis when the manpower work in odd times during the 24 hours it adversely affects the health of the employee which directly affects the performance of the services. In the BPO companies the health and fitness of the employees is very essential factor in order to run the function of a BPO company. Therefore, health and fitness services availed by the company for their employee is a necessity for providing the better quality of output service. It is to be kept in the mind that business organization is not meant for an entertainment of the employees but ultimate objective is to achieve optimum performance by the employee. For that purpose health and fitness of the employees are very necessary. The judgments relied upon by appellant are directly support the case of the appellant. As regard transport of goods as per the submission of appellant the transportation was used for the various activities of the appellant such as transportation of equipment like computers etc. Therefore, these services are input services even as per the inclusion clause of the definition of input service. As regard, the allegation that the transport service was used for transporting the household goods of employees. There is no evidence available as per show cause notice or as per the proceedings before the adjudicating authority and Commissioner (Appeals). I, therefore, do not agree with the contention of the Revenue. The Cenvat Credit in respect of electricity expense was denied only on the ground that this service was received by the landlord and not by the tenants i.e. appellant. It is very surprising that when the premises was occupied by the appellant and day-to-day repairs and maintenance are carried out in that premises. Obviously, the said services are received and used by the tenant only i.e. the appellant and not by the landlord. The services like repair, maintenance, electricity are directly used by the BPO service provider in order to carry out their day-to-day business activity. Therefore, in my view it is an input service and credit is admissible….”
The appeal was allowed.
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