CESTAT Mumbai Grants Major Relief To Capgemini; Holds IT/ITES Services Eligible For CENVAT Credit

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal has partly allowed an appeal filed by Capgemini Technology Services India Ltd., holding that most of the input services used in provision of Information Technology/Information Technology Enabled Services output services qualify as input services under Rule 2(l) of the CENVAT Credit Rules, 2004. The Bench comprising Member (Technical) M.M. Parthiban noted that Capgemini is engaged in providing IT and IT enabled services and avails CENVAT credit on input services under the CENVAT Credit Rules, 2004. The Tribunal examined whether the disputed services fall within the definition of “input service” under Rule 2(l) of the Rules. The Bench emphasized that the definition consists of a “means” portion, an “inclusive” portion, and an “exclusion” portion, and that every service must be tested within this framework. The Bench observed that similar issues had earlier been decided in Capgemini's favour in remand proceedings and earlier Tribunal orders. Therefore, the Revenue could not selectively deny credit on the same services for later periods. On facts, the Bench held that several disputed services such as maintenance of IT infrastructure, event management, public relations, photography, commercial training, and housekeeping have a direct nexus with the provision of output IT/ITES services and therefore qualify as input services. The Bench also accepted restaurant and health club/fitness services where they were shown to be necessary for running 24×7 IT operations and linked to specific business projects, referring to CBEC TRU Circular No. 120/01/2010-ST to support the nexus test. However, the Bench upheld disallowance of ₹4,39,177 relating to services expressly falling under the exclusion clause or not shown to have nexus such as rent-a-cab, certain restaurant bills for personal use, outdoor catering for employees, and unrelated share transfer services. In view of the above, the Bench partly set aside the impugned order and partly upheld the disallowance, thus the appeal was partly allowed, providing substantial relief to the assessee. Case Title: Capgemini Technology Services India Limited Vs. Pr. Commissioner of CGST & Central Excise Mumbai East Commissionerate Case No.: Service Tax Appeal No. 86740 of 2022 Appearance for Appellants: Shri Mihir Mehta Appearance for Respondent: APS PariharClick Here To Read/Download Order

CESTAT Mumbai Grants Major Relief To Capgemini; Holds IT/ITES Services Eligible For CENVAT Credit

Rajnandini Dutta

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