2015 (7) TMI 1240 - AT - Service Tax

Refund claim - service tax paid during the pre-registration period - Held that - registration is not compulsary for refund - appellant is entitled to the Cenvat credit of the services availed prior to registration and entitled to the refund thereof in view of no taxability due to export of services - refund allowed. Refund claim - non-establishment of nexus between input service and output service - Held that - Record reveals that there is no evidence placed before the Adjudicating authority to consider nor any justification was shown by him. Therefore, this aspect is remanded to Adjudicating authority to examine the evidence - appeal allowed by way of remand.

Summary

Issues:
1. Denial of refund of service tax paid during the pre-registration period.
2. Non-establishment of nexus between input service and output service for the second issue of refund.

Analysis:

Issue 1: Denial of refund of service tax paid during the pre-registration period
The appellate order highlighted two disputes, with the first being the denial of refund of service tax paid before registration. The Hon'ble High Court of Karnataka emphasized that there is no legislative mandate for such denial. The court noted that there is no provision in the Cenvat Credit Rules imposing a restriction based on registration for claiming Cenvat credit. Consequently, the court ruled that the denial of refund due to lack of registration is not supported by law. As a result, the appellant is deemed entitled to Cenvat credit for services utilized before registration and the refund thereof, especially in cases where no tax liability exists due to the export of services.

Issue 2: Non-establishment of nexus between input service and output service for the second issue of refund
The second issue pertains to the absence of a clear connection between input services and output services for the refund claim. The record indicated a lack of evidence presented to the Adjudicating authority to establish this nexus, with no justifications provided. Consequently, the matter is remanded to the Adjudicating authority for a reevaluation. The Adjudicating authority is directed to examine any evidence that the appellant may present regarding the claim, ensuring a fair opportunity for the appellant to be heard. The decision partially allows the appeal and instructs a reconsideration by the Adjudicating authority for this specific issue.

In conclusion, the judgment resolves the disputes by affirming the entitlement to Cenvat credit and refund for services availed pre-registration, while also addressing the need for establishing a clear nexus between input and output services for the second refund issue, thereby ensuring a fair and thorough review of the claims involved.