CESTAT Allows Refund of Rs.1.67 Cr for Fit-Out Services Used in Office Renovation, Holds Them as Eligible Input Services

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed a massive refund of Rs 1.67 crore for service tax paid on "fit-out services" used in office renovation. The tribunal held that these services, which include interior design, electrical work, and furnishing, are eligible "input services" for a business. The service tax department had denied the refund, arguing that these services were related to construction and were not directly used for providing the company's output service. However, the CESTAT took a broader view, stating that a modern and functional office environment is essential for a business to provide its services effectively. It concluded that fit-out services are integral to the operational efficiency and commercial activities of a business. Therefore, the CENVAT credit availed on the tax paid for these services is permissible and can be refunded.