2011 (11) TMI 256 - AT - Service Tax

100% EOU refund related to service tax paid on GTA services on inputs used in goods exported - part of refund claim rejected Held that - With respect to rejection of ₹ 3,92,848/- on ground that the appellants have taken credit even before payment of charges for the services to the service providers. However, there is no allegation that the appellants have not paid service charges subsequently. Thereby, they are eligible for this refund subject only to the condition that the appellants produce evidence of payment. Regarding the denial of refund relating to ₹ 75,685, it is held that input services includes activities like services of Chartered Accountant, telephone services. Further, recruitment of manpower for maintenance of mess is clearly an activity relating to the business of the appellants. Denial of the refund treating these three services as not input service is not correct. Regarding the denial of refund of ₹ 12,078/- as time barred it is to be noticed that Section 11B relates to refund of excise duty paid. Accumulated credit lying in the CENVAT credit account and permitted to be refunded in terms of Rule 5 of the CENVAT Credit Rules do not attract the provisions of Section 11B of the Central Excise Act 1944. Refunds are thus allowed.

Summary

Issues:
- Refund claim rejection by original authority
- Grounds for rejection of part of the refund claim
- Challenge to impugned order by appellant
- Validity of grounds for rejection
- Interpretation of Rule 4(7) of CCR 2004
- Definition of 'input services'
- Application of Section 11B for time-barred claims

Analysis:
The appeal revolves around a refund claim by a 100% EOU for service tax paid on GTA services related to exported goods. The original authority rejected the claim, citing exemption of exported products. However, the Commissioner (Appeals) allowed the appeal, leading to a partial refund. The appellant challenged the rejection of part of the claim, arguing that the original authority should have sanctioned the refund without re-examination. The key contentions included the eligibility of credits taken before payment to service providers, classification of certain services as 'input services,' and the applicability of Section 11B for time-barred claims.

The original authority rejected a portion of the claim for taking credits before service payment, but the Tribunal found no evidence of non-payment and deemed the appellant eligible for a refund upon verification of subsequent payments. Regarding the denial of a specific amount, the Tribunal interpreted 'input services' broadly, including activities like account maintenance, auditing, and recruitment, contrary to the original authority's view. The Tribunal emphasized that accumulated credit for refund is not subject to Section 11B provisions, applicable only to utilized credits for excise duty payment.

In conclusion, the Tribunal upheld the refund for the disputed amounts, subject to verification of service payment for one component. The decision highlighted the expansive definition of 'input services' and clarified the non-applicability of Section 11B to accumulated credits eligible for refund.