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2017 (5) G.S.T.L. 99 (Tri. - Bang.)

IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE
Shri S.S. Garg, Member (J)
MANHATTAN ASSOCIATES (I) DEV. CENTRE PVT. LTD.
Versus
C.S.T., BANGALORE
Final Order Nos. 20798-20805/2016, dated 21-9-2016 in Appeal Nos. ST/23245-23252/2014-SM
Refund of Service Tax - Accumulated Cenvat credit - Under Notification No.
5/2006-C.E. (N.T.), dated 14-3-2006 - Export of Information Technology and Software
Services - Denial of refund for absence of nexus between input services such as Air
Travel Services, Business Support Service, Club & Association Service, Design Service,
Event Management Service, Storage & Warehousing Service, Renting of Immovable
Property Service (Car Park, Cafeteria, etc.), Brokerage Service, Business Auxiliary
Services, Mandap Keeper Services, Convention Service, Interior Decorators Service,
Maintenance or Repair Service and Supply of Tangible Goods Services (Building
Maintenance) and output services - Each of impugned services held to be input
services used in export of output service - Denial of refund of accumulated Cenvat
credit not justified - Matters remanded to original authority for quantification of refund
claim and payment - Rules 2(l) and 5 of Cenvat Credit Rules, 2004. [paras 5, 6]
Case remanded
CASES CITED
Apotex Research Pvt. Ltd. v. Commissioner — 2015 (3) TMI 346 (CESTAT-BANGALORE) — Relied on [Para 5]
Commissioner v. Convergys India Pvt. Ltd. — 2009 (16) S.T.R. 198 (Tribunal) — Referred [Para 3]
Commissioner v. Convergys India Pvt. Ltd. — 2010 (20) S.T.R. 166 (P & H) — Referred.... [Para 3]
Commissioner v. Deloitte Tax Services India Pvt. Ltd. — 2008 (11) S.T.R. 266 (Tribunal) — Relied on [Para 5]
Commissioner v. Jubilant Biosys Ltd. — 2016 (42) S.T.R. 729 (Tribunal) — Relied on........ [Para 5]
Commissioner v. Mercedes Benz Research & Devlp. India (P) Ltd. — (2013) 37 taxmann.com 40 (Bangalore-CESTAT) — Relied on
[Para 5]
Commissioner v. Pokarna Ltd. — 2013 (292) E.L.T. 316 (Tribunal) — Relied on................. [Para 5]
Emcon Technologies India Pvt. Ltd. v. Commissioner — 2013 (31) S.T.R. 441 (Tribunal) — Relied on [Para 5]
Faurecia Interior Systems Ltd. — TS-312-CESTAT-2015-ST — Relied on............................ [Para 5]
Heartland Bangalore Transcription Services Pvt. Ltd. v. Commissioner — 2011 (21) S.T.R. 430 (Tribunal) — Relied on [Para 5]
J.P. Morgan Services (I) Pvt. Ltd. v. Commissioner — 2016 (42) S.T.R. 196 (Tribunal) — Relied on [Para 5]
Manhattan Associates (India) Development Centre (P) Ltd. v. Commissioner — 2015 (63) Taxman.Com 152 — Relied on [Paras 4, 5]
Megma Design Automation India Pvt. Ltd. v. Commissioner — 2015 (40) S.T.R. 800 (Tribunal) — Relied on [Para 5]
Pam Pharmaceuticals & Allied Machinery Co. Pvt. Ltd. v. Commissioner — 2016 (42) S.T.R. 757 (Tribunal) — Relied on [Para 5]
Qualcomm India Pvt. Ltd. v. Commissioner — 2016 (42) S.T.R. 886 (Tribunal) — Relied on [Para 5]
Vidyut Metallics Pvt. Ltd. v. Commissioner — 2016 (42) S.T.R. 321 (Tribunal) — Relied on [Para 5]

REPRESENTED BY : Shri Jayaram Hiregange, Consultant, for the Appellant.

Shri Mohammed Yousuf, Addl. Commissioner (AR), for the Respondent.

[Order]. - These eight appeals have been filed by the appellant M/s. Manhattan Associates (India) Development
Centre Pvt. Ltd. and in all these appeals, issue involved is common and therefore all these appeals are being disposed of
by this common order. The issue involved in all these appeals is whether the appellant is entitled to refund claim of
accumulated unutilised CENVAT credit of service tax paid on input services in terms of Rule 5 of CENVAT Credit Rules
(CCR), 2004 read with Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006. In other words, whether the stand taken by the
Revenue that there is no nexus between the input services and output services and therefore the appellant is not entitled
for refund of accumulated CENVAT credit under Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 issued under Rule 5
of CCR, 2004 is correct or not. Briefly the facts of the case are that appellant is a private limited company and is functioning
as a 100% EOU in terms of STP scheme and is a software technology park unit duly licensed as an EOU under Customs
Law and approved under the provisions of Foreign Trade Policy. The appellant is engaged in providing information
technology software services to its parent company abroad i.e., M/s. Manhattan Associations Inc, USA. The appellant is
wholly owned subsidiary of Manhattan Associates Inc., USA engaged in the development of several mainstream and critical
technology products across the entire spectrum of chain execution. The appellant is providing taxable services under the
category of Information Technology Software Services (ITSS) which are exported overseas. The appellant received various
input services for rendering the output/taxable services on which they have paid service tax to the service providers and
thereafter they availed the CENVAT credit in accordance with CCR, 2004. The appellant filed refund claim for refund of tax
paid on the input services on 22-7-2011 but the Assistant Commissioner of Service Tax vide his order dated 30-8-2013
rejected the refund claims on certain grounds. Aggrieved by the said order, the appellant filed appeal before the

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Commissioner (A) and the Commissioner (A) vide his order dated 30-6-2014 allowed the appeal with respect to
certain services and rejected the appeal with respect to certain services on the ground that there is no nexus between the
input service and output service. Aggrieved by the said order, the appellant have filed the present appeals.
2. Heard both the parties and perused the records.
3. Learned consultant for the appellant submitted that the impugned order is not sustainable in law as it is against
the precedent decisions rendered by Tribunals and the High Courts. He further submitted that once the taking of credit is
not disputed, there can be no disallowance of the same while granting refund. In this connection, appellant relied upon
Tribunal’s decision in the case of Commissioner of Service Tax v. Convergys India Pvt. Ltd. - 2009 (16) S.T.R. 198 wherein
the Division Bench of this Tribunal held that there cannot be two different yardsticks, one for permitting credit and the other
for eligibility in granting refund. Whatever credit is permitted to be taken, the same are permitted to be utilised and when the
same is not possible then there is a provision for grant of refund and/or the rebate. This ruling of the Tribunal has been
upheld by the High Court in Revenue’s appeal vide order dated 3-8-2010 reported in 2010 (20) S.T.R. 166 (P & H).
4. The learned consultant filed written submissions whereby he submits a table containing the details and nature
of input services and how they have been used for providing output services only, by proper justification and therefore the
condition of Notification that the services are to be used for providing output services have been complied with full. He
further submitted that refund has been rejected on account of lack of nexus between the input services and output services.
He further submitted that in the appellant’s own case reported in 2015 (63) Taxman.com 152, this Tribunal has allowed
refund of CENVAT credit relating to number of similar input services involved in the present appeals.
5. I have gone through the table submitted before me. On perusal, I find that in respect of these services reliance
of the appellant on the decisions of the Tribunal mentioned against each service is squarely applicable and appropriate.
Moreover, the submission regarding the nature of service received and its use also shows that the stand taken by the
Revenue that there is no nexus between the input service and output service is not correct. For better appreciation, the
nature of services and justification with the decisions of the Tribunal with which I agree is reproduced below :

Sl. Input Service Justification of the Decisions Relied on

No. Appellant
1. Air Travel Agent These services are availed Manhattan Associates (India)
Service by the Appellant in Development Centre (P.) Ltd. v.
connection with the business Commissioner of Service Tax, [2015]
travel of its employees such 63 taxmann.com 152 (Bangalore -
as to attend client meetings, CESTAT), Megma Design Automation
workshops and training (I) Pvt. Ltd. - 2015 (40) S.T.R. 800 (Tri.
programmes - Bang.), Emcon Technologies India
Pvt. Ltd. v. CC - 2013 (31) S.T.R. 441
(Tri.-Bang.), Vidyut Metallics P. Ltd. -
2016 (42) S.T.R. 321 (Tri. - Mumbai)
2. Business Support Availed these services in Manhattan Associates (India)
Service connection with the provision Development Centre (P.) Ltd. v.
of basic infrastructural Commissioner of Service Tax, [2015]
services to the employees 63 taxmann.com 152 (Bangalore -
who are engaged in the CESTAT), Megma Design Automation
business of rendering of (I) Pvt. Ltd. - 2015 (40) S.T.R. 800 (Tri.
export services. - Bang.),
3. Club & The Appellant has availed Qualcomm India Pvt. Ltd. - 2016 (42)
Association services in the nature of S.T.R. 886 (Tri. - Mumbai),
Service membership of business Pam Pharma. & Allied Machinery Co.
research groups which P. Ltd. - 2016 (42) S.T.R. 757 (Tri. -
covers regular and updated Mumbai)
information to the assessee
on target markets, the latest
business trends and news
and organizes conferences
and discussions on issues
which are critical to the
smooth and profitable
functioning of the business
of the assessee.
4. Design Service Availed in relation to printing Apotex Research Pvt. Limited v.
and publication of mailers by Commissioner - 2015 (3) TMI 346 -
third party service providers; (CESTAT BANGALORE)

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that the employees are

benefited and informed of
various training
programmes, performance
reward programmes. etc.,
which act as incentives to
them to enhance their
performance and efficiency
at their workplace.
5. Event Procured for the purpose of J.P. Morgan Services (I) Pvt. Ltd. -
Management business development 2016 (42) S.T.R. 196 (Tri.-Mumbai)
Service meetings and events; to
discuss business trends,
global developments and to
plan strategy for the future
development of the
business.
6. Management Availed in relation to its Appellant wishes to rely upon the
Consultancy business for assuring decision of Megma Design Automation
Service smooth functioning, timely (I) Pvt. Ltd. - 2015 (40) S.T.R. 800 (Tri.
and accurate compliance of - Bang.) & M/s. Heartland Bangalore
statutory obligations as Transcription Services (P) Ltd. v. CST
applicable under the various - 2011 (21) S.T.R. 430 (Tri.-Bang.)
laws. wherein it was held that professional
services of consultants are used for
assisting the assessee in complying
with various statutory provisions.
Therefore, it was eligible for refund.
CCE v. Deloitte Tax Services India
Pvt. Ltd. - 2008 (11) S.T.R. 266 (Tri.-
Bang.).
7. Storage & Availed for storage of J.P. Morgan Services (I) Pvt. Ltd. -
Warehousing important business related 2016 (42) S.T.R. 196 (Tri.-Mumbai)
Service information in files and hard
disks which is very important
for smooth and organized
functioning.
8. Renting of To cater to a huge We submit that car parking and
Immovable workforce, assessee is cafeteria are integral part of the
Property Service required to provide car business premises owing to the fact
(Car Park, parking space as well as that the Appellant has more than 1000
Cafeteria, etc.) cafeteria facilities as a basic employees working at the facility. The
necessity for the employees Appellant is duty bound to provide
to be able to efficiently these facilities. In this regard, we
provide the services. would like to rely on the following
decisions:
(a) Manhattan Associates (India)
Development Centre (P.) Ltd. v.
Commissioner of Service Tax, [2015]
63 taxmann.com 152 (Bangalore -
CESTAT)
(b) Commissioner of Service Tax,
Bangalore v. Mercedes Benz
Research & Devlp. India (P.) Ltd.
[2013] 37 taxmann.com 40 (Bangalore
- CESTAT)
Similarly, in the case of Faurecia
Interior Systems Ltd. TS-312-
CESTAT-2015-ST, it was held that
service tax paid on car parking rentals,
the car parking is part of the business
premises of the appellant and is a
business expenditure.
9. Brokerage These services are used These services are akin to real estate
Service with respect to finalization of agent’s services.
building (office premises)

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agreement between them

and owner of the property.
10. Business These services are availed Apotex Research Pvt. Limited v.
Auxiliary Services for marketing and Commissioner - 2015 (3) TMI 346 -
advertisement in relation to CESTAT BANGALORE Pokarna Ltd. -
the output services provided. 2013 (292) E.L.T. 316 (Tri. - Bang.)
The Appellant submits that CST, Bangalore v. Jubilant Biosys Ltd.
these services are essential - 2016 (42) S.T.R. 729 (Tri. - Bang.)
and connected with the
operations of the Appellant
11. Mandap Keeper Used in relation to business Apotex Research Pvt. Limited v.
Services events conducted from time Commissioner - 2015 (3) TMI 346 -
to time, for the purpose of (CESTAT BANGALORE)
maintaining satisfied
workforce as well as building
client relationships.
12. Convention These services are with Apotex Research Pvt. Limited v.
Service regard to attending of Commissioner - 2015 (3) TMI 346 -
conference on business (CESTAT BANGALORE)
technology by the
employees of the Appellant
which contributes to
knowledge enhancement
and industry awareness of
the employees.
13. Interior Availed for revamping of the Apotex Research Pvt. Limited v.
Decorators interiors of the premises Commissioner - 2015 (3) TMI 346 -
Services from where they are (CESTAT BANGALORE)
providing their output
services.
14. Maintenance or Availed for the maintenance Apotex Research Pvt. Limited v.
Repair Service or repair office/building Commissioner - 2015 (3) TMI 346 -
(Building premises, for the effective CESTAT BANGALORE, CST,
Maintenance) and efficient provisioning of Bangalore v. Jubilant Biosys Ltd. -
services exported. 2016 (42) S.T.R. 729 (Tri. - Bang.)
15. Supply of The Appellant submits that Megma Design Automation (I) Pvt. Ltd.
Tangible Goods the said services has been - 2015 (40) S.T.R. 800 (Tri. - Bang.),
Services availed in relation to rental of CST, Bangalore v. Jubilant Biosys Ltd.
infrastructural facilities like - 2016 (42) S.T.R. 729 (Tri. - Bang.)
workstation within the
premises from which the
services are exported.
6. In view of the aforesaid discussions and following the ratio of the case laws cited supra, I am of the view that
the appellant is entitled for the refund and there is nexus between the input services and the output services. All appeals
are allowed by way of remand to the original authority for quantification of the refund claim and its payment.
(Order was pronounced in open Court on 21-9-2016.)
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