CESTAT: Membership Subscription Charges are eligible for CENVAT Credit

CESTAT: Membership Subscription Charges are eligible for CENVAT Credit

The Customs, Excises and Service Taxes Appellate Tribunal (CESTAT), Chennai Bench, in the case titled M/s Trimble Information Technologies India Pvt. Ltd. (Appellant) v. The Commissioner of G.S.T. and Central Excise Chennai South Commissionerate (Respondent) ruled that the Membership subscription charges are eligible for CENVAT Credit as per the definition of "input service".

The CESTAT Judicial Member Mr P. Dinesha took into consideration the various services provided by the appellant and ruled that they are essential services and therefore, the same would qualify as input service and hence eligible for a refund.

The factual matrix of the case is that the assessee- M/s. Trimble Information Technologies India Pvt. Ltd. being aggrieved by the orders passed by the Commissioner of Central Tax has filed these appeals and the common issue to be decided is the denial of a 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.

The authorized representative/assistant commissioner appearing for the revenue relied on the findings in the impugned order. He also contended specifically that the appellant did not file any details with regard to the following services and hence, the authorities below have rightly denied the refund on Plant Rental Charges, Freight Charges, Installation Charges, Auditorium Charges, and Event Management Charges.

The CESTAT observed that on the Plant Rental Charges, the appellant has claimed that the said service is akin to Gardening Services, but however, it appears that the appellant did not file any details as to the nature of service.

However, 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 Tribunal added that with regard to 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.

It added that the 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 Tribunal stated that "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."

The Tribunal found that parking charges are an essential service provided to all the employees and used by them during the course of their employment and hence, this forms an essential service.

Regarding the Auditorium Charges the Tribunal opined that it is the case of the appellant that the auditorium was taken on rent for conducting trainings or meetings in relation to the appellant's business, which services are Cenvatable.

It concluded that "The above service is an essential service since the training is provided for the employees of the appellant or business meetings are held there and hence, the denial of CENVAT Credit is not justified."

The Tribunal held that regarding the Event Management Charges, it is the case of the appellant that the above services were used for promoting the brand name of the company, and the expenses relating to advertisements or sales promotions are specifically covered within the scope of the definition of "input service" under Rule 2 (l).