2010 (10) TMI 476 - AT - Service Tax

Refund of service tax credit - Export of services - Input services utilized by assessee for the export of services - the Adjudicating Authority had rejected the refund on the ground that the assessee had not submitted any evidence regarding the breakup of values for the services rendered - However, the Chartered Accountant s statement submitted by the appellants is giving the break up of IT and ITes turnover for the impugned period but it is not exhaustive to the effect that the input services are utilized for which category of services since the company has been billed commonly by the service providers and the consumption cannot be separated since the expenses and income are common in their activities - Notification No. 5/2006-C.E. (N.T.), dt. 14-3-2006 which was relied upon by both sides talks about the amount of refund to be granted to an assessee based upon the formula in that notification may also apply - Find that this aspect has not been examined by the lower authorities while rejecting the refund claims filed by the assessee - Hence, set aside the impugned order and remand the matter back to the Adjudicating Authority to re-consider the issue afresh, on the basis of the calculations, as per the Notification No. 5/2006 and arrive at the amount of refund i.e. to be sanctioned to the appellant.

Summary

Issues:
Refund claim of service tax credit on input services for export of services.

Analysis:
1. The appeal was against the rejection of a refund claim of Rs. 46,04,719 on unutilized service tax credit under Cenvat Credit Rules, 2004. The Adjudicating Authority rejected the claim stating the input services were used for taxable and non-taxable services, making it challenging to ascertain. The Commissioner (Appeals) upheld the rejection, leading to the appeal before the Tribunal.

2. The appellant's Chartered Accountant argued that the refund claim was only for services taxable under ITeS category. They provided a breakup of taxable and non-taxable services exported, supported by a certificate. The Adjudicating Authority claimed the breakup was insufficient, as the appellant billed for services collectively, making separation difficult. The appellant maintained that subsequent to 2008, the Authority allowed similar refund claims.

3. The Departmental Representative contended that the appellant failed to provide statutory documents confirming service valuations for taxable and non-taxable services. They argued that the onus was on the applicant to establish their case, which, in this instance, was not done satisfactorily.

4. Upon review, the Tribunal noted the Commissioner's findings that the breakup provided was not exhaustive to determine input service utilization for taxable or non-taxable services. However, the Tribunal found that further clarification from the appellant could have been sought before rejecting the claim. The Tribunal emphasized the need for a factual assessment by the Adjudicating Authority.

5. The Tribunal highlighted that the Notification No. 5/2006-C.E. (N.T.) formula for refund calculation was not considered by the lower authorities. Acknowledging the certificate from the Chartered Accountant showing the value bifurcation, the Tribunal directed a reevaluation by the Adjudicating Authority based on this information.

6. Without expressing a final opinion on the case's merits, the Tribunal remanded the matter to the Adjudicating Authority for a fresh assessment following the Notification's guidelines. The Adjudicating Authority was instructed to ensure natural justice principles were observed and to conclude the matter within three months.

In conclusion, the Tribunal allowed the appeal for remand to the Adjudicating Authority, emphasizing the need for a detailed assessment based on the provided documentation and Notification guidelines.