2026-VIL-461-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Eligibility of CENVAT credit on common area maintenance service, vending machine service, photography service, and travel agent service - Whether the services in question can be considered as eligible input services under the CENVAT Credit Rules, 2004 – HELD - The common area maintenance service, vending machine service, and travel agent service have an indirect nexus to the output service provided by the appellant and are therefore eligible input services under the CENVAT Credit Rules. The definition of "input service" under Rule 2(l) of the CENVAT Credit Rules includes services that are used directly or indirectly by the provider of output service. There is no requirement for a one-to-one correlation between the input services and the output services. If the absence of any service adversely impacts the quality and efficiency of the output service, it should be considered as an eligible input service. The refund of CENVAT credit on these services was wrongly denied by the department – The impugned order is set aside and the appeal is allowed - Distinct person status of appellant and FRLON (USA) for the purpose of export of service - Whether the appellant and FRLON can be considered as distinct persons for the purpose of export of service under the Service Tax Rules, 1994 – HELD - The appellant and FRLON are two separate companies registered in different countries, managed by different professional people, and therefore, they are distinct persons. The definition of "distinct person" under Explanation 3(b) of Section 65B(44) of the Finance Act, 1994, states that an establishment of a person in the taxable territory and an establishment of any other person in a non-taxable territory shall be treated as establishments of distinct persons - The department had earlier sanctioned the refund filed by the appellant, accepting that the transaction between the appellant and FRLON was an export of service. Further, the High Court of Gujarat had also held that a holding company located outside India/non-taxable territory is to be treated as a distinct person from its Indian subsidiary for the purpose of export of service. Accordingly, the transaction between the appellant and FRLON should be treated as an export of service.
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