Omega Healthcare Management Services Pvt. Ltd. vs Commissioner Of Central Tax, Bengaluru East

The present appeal is directed against the impugned order dated 19/12/2019 passed by the Commissioner of Central Tax (Appeals), Bangalore whereby the Commissioner has partly allowed the cenvat credit on the impugned input services and rejected the cenvat credit to the tune of Rs. 18,75,083/- (Rupees Eighteen Lakhs Seventy Five Thousand and Eighty Three only) on five input services. Briefly the facts of the present case are that the appellant is primarily engaged in the business of providing taxable services namely Business Support Services and others. They had availed cenvat credit of Rs. 1,40,76,543/- (Rupees One Crore Forty Lakhs Seventy Six Thousand Five Hundred and Forty Three only) on account of Business Support Services, Cleaning Services, Event Management Services, Facility Management Services, Hotel, Inn, club and Guest House Services, Real Estate Agent Services, Works Contract Services, Mandap Keeper Services, Accommodation in Hotels for the period of April 2015 to June 2017. On the basis of audit, a show-cause notice was issued to the appellant proposing to recover the amount of Rs. 1,43,53,520/- (Rupees One Crore Forty Three Lakhs Fifty Three Thousand Five Hundred and Twenty only) being ineligible cenvat credit availed and utilized on ineligible input services for the period April 2015 to June 2017 under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 73(1) of the Finance Act, 1994. Appellant filed detailed reply to the show-cause notice along with documents. After following the due process, the Additional Commissioner vide his order dated 27/09/2018 rejected and demanded the cenvat credit to the tune of Rs. 32,57,563/- (Rupees Thirty Two Lakhs Fifty Seven Thousand Five Hundred and Sixty Three only) on various ineligible input services. Aggrieved by the said order, appellant filed appeal before the Commissioner and the Commissioner vide the impugned order upheld the order demanding tax to the tune of Rs. 18,75,083/-(Rupees Eighteen Lakhs Seventy Five Thousand and Eighty Three only). Hence, the present appeal is confined to the demand of Rs. 18,75,083/- (Rupees Eighteen Lakhs Seventy Five Thousand and Eighty Three only) rejected by the Commissioner on the following input services given below:

Sl. No.

Classification

Cenvat Amount Rs.

1

Mandap Keeper Service

9,42,774

2

Real Estate Agent Services

4,52,185

3

Works Contract Service

4,49,978

4

Event Management Services

25,169

5

Facility Management Services

4,977

Total

18,75,083

Heard both the parties and perused the records.

Learned CA for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts, documentary evidence and the binding judicial precedent. He further submitted that the impugned services on which the cenvat credit has been denied has been held to be input services by various decisions of the Tribunal. He referred to Mandap Keeper Service and submitted that the said service falls in the definition of 'input service' as provided in Rule 2(l) of Cenvat Credit Rules, 2004. He submitted that Mandap Keeper Service is used for organizing the event by the company for official or business functions to accommodate all the employees for gatherings. The company also hires convention centres to conduct business programmes and employees' motivation programmes. The said services will be a basic requirement for employees' welfare and is essential requirement in providing output services. In support of this, he relied upon the following decisions:

a. Endurance Technologies Pvt. Ltd. V. Commr. of C.Ex., Aurangabad - 2013 (32) S.T.R. 95 (Tri.-Mumbai)

b. Manhattan Associates (India) Development Centre Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore

3.1. As far as Real Estate Agents Service is concerned, the learned CA submitted that the services availed are in relation to sale, purchase, leasing or renting of any real estate by the company for setting up of its business premises. Real Estate Agents Services are also hired to obtain the office premises for the company from where the services were provided. For this, he relied upon the following decision:

Commissioner of Service Tax, Mumbai-II Vs. WNS Global Services - 2016 (44) S.T.R. 454 (Tri.-Mumbai)

3.2. For Works Contract Services, the learned CA submitted that these services are required by the company in relation to finishing services, repair, alteration or restoration etc. Assets & equipment require constant repairs and maintenance for carrying out the business operations within the premise. Therefore, such maintenance or repair services are specifically included in the definition of "input services" are in relation to the output services rendered by the company. For this, he relied upon the following decisions:

a. Red Hat India Pvt. Ltd. Vs. Principal Commissioner of S.T., Pune - 2016 (44) S.T.R. 451 (Tri.-Mumbai)

b. Alliance Global Services IT India (P) Ltd. Vs. C.C.E & S.T., Hyderabad-IV

c. J.P. Morgan Services (I) Pvt. Ltd. Vs. Commissioner of S.T., Mumbai

3.3. As far as Event Management Services are concerned, the learned CA submitted that these services were obtained in relation to business promotion and team building activities and are used to plan interaction with employees' senior leadership of the company and used primarily for employee motivation and welfare measures. These services are essential as they ultimately help in grooming of the employee which in turn contributes to the growth of the company. For this submission, he relied upon the following decisions:

a. Commissioner of C. Ex, Delhi & Delhi-III Vs. Convergys India Services Pvt. Ltd. - 2017 (48) S.T.R. 173 (Tri.-Chan.)

b. DBOI Global Services Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai - 2017 (48) S.T.R. 157 (Tri.-Mumbai)

c. Accenture Services (P) Ltd. V. Commissioner [2015 (63) Taxman.com 235]

d. IBM India Pvt. Ltd. V. Commissioner - 2014 (35) S.T.R. 384

e. Shakun Advertising (P) Ltd. V. Commissioner - 2015 (64) taxman.com 153]

f. Gateway Terminals (I) Pvt. Ltd. V. Commissioner - 2015 (39) S.T.R. 1027

g. Manhattan Associates (India) Development Centre Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore

3.4. Similarly, Facility Management Services were availed for housekeeping services for the upkeep of the premises and provide all facilities required for services to be exported and are related to the business. For this, he relied upon the following decision:

Deloitte Tax Services India Private Limited - 2008-TIOL-629-Tri.

3.5. He further submitted that the definition of 'input service' has been amended from 01/04/2011 and the scope of 'input service' has been widened and it is not required to have one to one correlation between the input services and the provisions of output services. He also submitted that the appellant filed the refund claim before the lower authority and the lower authority has already sanctioned the refund of Rs. 10,17,414/- (Rupees Ten Lakhs Seventeen Thousand Four Hundred and Fourteen only) for the input services for which the credit has been denied in the present case. He further submitted that while granting the refund, the lower authority has verified the various invoices and sanctioned the refund under Mandap Keeper Services to the tune of Rs. 9,42,774/-(Rupees Nine Lakhs Forty Two Thousand Seven Hundred and Seventy Four only), Works Contract Service to the extent of Rs. 69,662/- (Rupees Sixty Nine Thousand Six Hundred and Sixty Two only) and Facility Management Services to the extent of Rs. 4,978/- (Rupees Four Thousand Nine Hundred and Seventy Eight only) and rejected the refund to the extent of Rs. 8,54,467/-(Rupees Eight Lakhs Fifty Four Thousand Four Hundred and Sixty Seven only) on Real Estate Agent Services and Event Management Services. Learned CA has also filed detailed charts in Annexure-A containing list of invoices on which credit is availed and is under dispute. In the said chart, the appellant has given the details of all the invoices date, name of service provider, and description of service classification and classification in refund claim and classification as per invoice and also the nature of work. Perusal of these statements show that the nature of input services is primarily building maintenance and housekeeping and cleaning service and he has also furnished statement showing categorywise nexus/write off on the input services received for the purpose of output service.

On the other hand the learned AR reiterated the findings of the impugned order and submitted that the appellant has not furnished all the invoices pertaining to the availment of input services. He further submitted that in the invoices which have been produced and which is mentioned in the chart there are discrepancies with regard to the nature of work mentioned in the invoices and the services for which the service provider was registered.

After considering the submissions of both the parties and perusal of the material on record, I find that originally show-cause notice proposing to demand service tax of Rs. 1,43,53,520/-(Rupees One Crore Forty Three Lakhs Fifty Three Thousand Five Hundred and Twenty only) was issued. After verification by the Additional Commissioner, cenvat credit of Rs. 1,08,18,980/-(Rupees One Crore Eight Lakhs Eighteen Thousand Nine Hundred and Eighty only) was allowed and cenvat credit of Rs. 32,57,563/-(Rupees Thirty Two Lakhs Fifty Seven Thousand Five Hundred and Sixty Three only) was held to be ineligible and demanded along with interest and penalty. Thereafter, the Commissioner during the appeal proceedings has allowed the cenvat credit on certain input services to the tune of Rs. 13,82,480/- (Rupees Thirteen Lakhs Eighty Two Thousand Four Hundred and Eighty only) and rejected the cenvat credit of Rs. 18,75,083/- (Rupees Eighteen Lakhs Seventy Five Thousand and Eighty Three only) on five input services. Further, I find that simultaneously refund proceedings were going on with regard to the refund of cenvat credit of unutilized cenvat credit and the lower authority out of Rs. 18,75,083/- (Rupees Eighteen Lakhs Seventy Five Thousand and Eighty Three only) sanctioned refund of Rs. 10,17,414/-(Rupees Ten Lakhs Seventeen Thousand Four Hundred and Fourteen only) and rejected the refund of Rs. 8,54,467/- (Rupees Eight Lakhs Fifty Four Thousand Four Hundred and Sixty Seven only). Further, I find that the case-laws cited by the appellant have categorically held that input services viz. Mandap Keeper Service, Real Estate Agent Services, Works Contract Service, Event Management Services and Facility Management Services fall in the definition of 'input service' and cenvat credit cannot be denied on these input services as has been held in various cases relied upon by the appellant cited supra. Further, I find that the cenvat credit on input services are in fact relating to the business activity of the appellant and are covered by the definition of 'input service' under Rule 2(l) of the Cenvat Credit Rules, 2004. Though I find that in some of the invoices, the nature of service mentioned is different but the classification shown in the invoice is different but this kind of a discrepancy will not disentitle the appellant to claim cenvat credit once the input service is used for the business activity of the appellant. In some invoices, the nature of service mentioned is different but the classification as per the invoice is different but definitely all these services have been used by the appellant for rendering output service. Various decisions relied upon by the appellant have categorically held these services to be an 'input services'. Therefore, by following the ratio of the above said decisions, I hold that these services fall in the definition of 'input service' and the appellant has rightly claimed the cenvat credit. Hence, I allow the appeal of the appellant subject to the verification of the various invoices pertaining to the period disputed by the lower authority. Appeal is accordingly disposed of.

(Order was pronounced in Open Court on 19/08/2021)