2014 (7) TMI 329 - AT - Service Tax

Refund claim - Relevant date for refund claim - Whether relevant date specified under Section 11B of Central Excise Act 1944 is relevant for refunds under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification 5/2006-C.E. (N.T.) dated 14.03.2006 - Held that - in the case of goods exported, the relevant date would be the date of export of goods but the same analogy may not be applicable in respect of relevant date for the purpose of refund. The liability to pay tax or duty arises in the case of manufactured goods as soon as they are manufactured whereas in the case of service tax till the law was amended, only when the consideration was received, the liability to pay tax arose. Without clearance of goods, the liability to pay tax does not arise and in the absence of liability to pay tax, further proceedings also would not happen. That being the situation, invariably even if the taxable event is manufacture, the calculation of tax took place after removal and for the purpose of calculation of duty liability it is always the date of removal that is considered - it would be appropriate that the relevant date for calculating the time limit under Section 11B also should be the date on which consideration is received. - Decision in the case of CCE, Pune-I Vs. Eaton Industries P. Ltd. 2010 (12) TMI 71 - CESTAT, MUMBAI followed. Nexus and the admissibility of CENVAT credit - Held that - That in respect of construction services credit would be admissible and in respect of other services, we agree that the original authority should consider each service separately - issue relating to nexus as well as the admissibility of CENVAT credit are in favour of the assessee and a more detailed consideration of each service in the light of Infosys decision of this Tribunal would be appropriate as regards services other than construction service which we have not considered. - Decision in the case of Infosys Ltd. 2014 (3) TMI 695 - CESTAT BANGALORE to be followed - matter remanded back. - Decided in favour of assessee.

Summary

Issues Involved:
i. Relevant date for refunds under Rule 5 of CENVAT Credit Rules, 2004
ii. Eligibility of services as input services for refund
iii. CENVAT credit availed before payments for services

Analysis:

i. Relevant Date for Refunds:
The dispute revolves around whether the time limit for filing refund claims should be based on the date of export of services or the date of receipt of consideration. The department argues that claims filed beyond one year from the date of export are time-barred. However, the appellant contends that the relevant date should be the date of receipt of consideration, citing a Tribunal decision. The Tribunal opines that for services, the relevant date should indeed be the date of payment, unlike goods where it is the date of export. The liability to pay tax for services arises upon consideration receipt, not provision. Hence, the Tribunal rules in favor of the appellant, allowing claims within one year of receiving consideration.

ii. Eligibility of Services as Input Services:
The issue of nexus between input and output services arises. The department questions the eligibility of CENVAT credit, arguing no connection between input services and output services. However, the Tribunal refers to a previous case where the definition of 'input services' was discussed, supporting the admissibility of credit for certain services. The Tribunal directs a detailed consideration of each service, in line with the previous decision, except for construction services where credit is deemed admissible.

iii. CENVAT Credit Availed Before Payments:
The appellant's counsel relies on precedent to support the argument that refund claims filed within one year of receiving consideration are valid, irrespective of the date of export. The Tribunal concurs, emphasizing the importance of the date of consideration receipt for tax liability in service-related transactions. The decision highlights the distinction between goods and services concerning the relevant date for calculating time limits under Section 11B.

In conclusion, the Tribunal sets aside the lower authorities' decisions and remands the matters for fresh consideration by the original adjudicating authority. The refund claims are to be reevaluated, excluding construction services, in light of the Tribunal's decision regarding the eligibility of CENVAT credit for various services. The appellant is granted a fair opportunity to present their case if any part of the refund is proposed for rejection. The judgment emphasizes the significance of the date of consideration receipt in determining the admissibility of refund claims, especially in the context of service-related transactions.