Genpact India vs C.S.T. Service Tax, Delhi

[Arising out of Order-in-Appeal No. 168 and 169/S.Tax/Appl/D-II/2821 dated 20.8.2013 passed by Commissioner (Appeals), Central Excise, New Delhi]

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

Genpact India Appellant

Vs.

C.S.T. Service Tax, Delhi Respondent

Appearance:

Present for the Appellant: Shri Nageshwar Rao, and

Ms. Sayaree Basu, Advocate

Present for the Respondent: Shri R.K. Gupta, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52721-52722/2015

Per: Sulekha Beevi C.S.

1. The appellant challenges the impugned order which denied the refund of Cenvat credit.

1.1 The appellant provides BPO services to Genpact International, (GI) Hungary Branch. These services are classified under the category of Business Auxiliary Services (BAS) taxable under Section 65 (105) (zzb) of the Finance Act, 1994. These services provided to overseas clients of GI satisfies the conditions prescribed under the Export Service Rules, 2005, and appellant avails benefit under Rule 5 of the Cenvat Credit Rules, 2004. Accordingly the appellant filed a refund claim for the relevant period under Notification No. 5/2006-CE (NT) dated 14.3.2006. The primary adjudicating authority denied the claim in regard to Event Management Services, Sponsorship Services and Works Contract Services. In appeal the Commissioner (appeals) allowed claim with regard to works contract and disallowed the others. Aggrieved appellant has preferred this appeal.

2. The dispute relates to Event Management and Mandap Keepers services for the period November 2009 and Event Management and Sponsorship Services for the period January 2010. The learned Counsel for appellant submitted that the authorities below failed to appreciate the definition of input services in the correct perspective. He submitted that appellant is a BPO with huge number of employees. Appellant provides Business Auxiliary Services to customers located in India as well as outside. Majority of services provided are exported outside the country. The impugned services are availed for sponsoring events and conduct of events. The learned Counsel laid thrust that the authorities below though rejected refund on these services have not held that these services did not qualify as input services. That the reason for denial of refund of credit is stated that these input services were not used in providing output services exported and that they are not indispensable for carrying out the output services. The Counsel submitted that there cannot be two separate yardsticks for availing Cenvat credit and for refund of the same. That when the impugned services qualified as eligible for availing credit, the rejection of refund was not justified. He relied on Circular No. 120/01/2010-ST dated 19.1.2010. The learned Counsel explained that all these input services were used for providing output service exported.

3. The impugned order was supported by the DR who submitted that the Commissioner (Appeals) has rightly rejected the refund claim. The appellant had failed to explain the essential nature of the input service as to how the said service, if absent would adversely affect the efficiency of output service. That appellants failed to specify the role of appellants in the sponsorship services. Merely stating that they sponsored certain events without substantiating that the same has nexus with the activities of output service is not sufficient to allow refund of the credit.

4. Heard both sides and perused the records carefully. At the outset it has to be stated that the disputed period is prior to 1.4.2011 when the definition of input services had a more wide ambit and included activities relating to business. The judicial pronouncements analyzing the admissibility of credit of service tax paid, is to test whether the expense incurred is in relation to the business of the assessee. If the answer is in affirmative, the courts have allowed the credit.

5. On behalf of the appellants it is submitted that Event Management Services availed were in the nature of job fairs and events which had the object of imparting information about the Company to prospective employees. Through such activities, the Company was able to procure manpower for providing its output services. Besides this, Event Management Services were availed for organizing workshops, in-house trainings, team building events. The appellants have produced additional submission with details of documents of availing these services. Some of the documents are the correspondences for availing event management services, sponsorship services etc. Some of the sponsorship services are Conference on Venture Capital Finance, National Conference on Good Corporate Governance, Indian Economic Summit, International telecom Conference, Indian Health Summit, Conference on Chief Financial Officers Strategy etc. It is submitted that sponsorship of various events enables the appellants to reach across various sectors of the industry and enhance its customer base. It is also pointed out that as per service tax return filed for F.Y. 2009 & 10 and 2013-14 its domestic business has increased from Rs.580 million in 2009-10 to Rs.1870 million in 2013-14. That the international business has increased from 24000 Million in 2009-10 to Rs.46000 Million in 2013-14. That brand promotion becomes an essential expenditure and availing such services has helped the same. These figures throw light on the output services of the appellant. The impugned services have to be analyzed not only on the nature of services provided but also the nature of the assessee/company. The appellant being a Company which undertakes major sponsorship services the events sponsored and carried out also is of the like nature. During the disputed period the definition of input services was very wide and included almost all activities related to business. Further when there is no dispute that credit is admissible on these services and the same is permitted to be utilized, the eligibility for refund of un-utilized credit cannot be measured with a different yardstick.

6. In Coca Cola India (P) Ltd. Vs. CCE Pune-III 2009 (242) ELT 168 (Bom) the Honble High Court observed that the use of the word activities in the phrase activities relating to business further signifies the wide import of the phrase activities relating to business. The Rule making authority has not employed any qualifying words before the word activities, like main activities or essential activities etc. Therefore it must follow that all and any activity relating to business falls within the definition of input services provided there is a relation between the manufacture and the activity. As already discussed the appellant being a BPO, exporting services, having large number of employees and a huge customer base in India and abroad the impugned services cannot be said to be not related to the activities relating to business of the appellant. Further, the appellant also produced copy of Order-in-Original in appellants own case dated 11.02.2011 for the period January 2009 where the refund for Event Management services and Advertisement Services have been allowed.

7. In view there of, I hold that the rejection of refund claim in regard to Event Management Service and Mandap Keeper services for the period November 2009 and Event Management Services & Sponsorship Services for the period January 2010 is un-sustainable. The impugned order to this extent is set aside.

8. With the above observations, the appeal is allowed.

(Pronounced on 01/09/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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