2015 (7) TMI 793 - AT - Service Tax

Denial of refund claim - Accumulation of CENVAT Credit - service tax reregistration was not obtained prior to export - Notification No. 5/2006-C.E. (N.T.) , dated 14-3-2006 - Held that - As per para 3(b) of the Appendix to the notification, the provider of output services has to submit an application indicating the registered premises from which export services are provided. This is a procedural formality provided in Appendix to the Notification and nowhere in the Notification condition is laid that refund will be granted only if the Service Tax registration has been taken at the time of export of services. - it can be verified from the records whether the input services were received and utilised for providing the export services. The lower authorities have not done any such verification. - As regards the nexus of input services and output services, I agree with the respondent that all the services are used for providing the output services as held in the case of Ultratech Cement Ltd. - 2010 (10) TMI 13 - BOMBAY HIGH COURT . The bland statement of the adjudicating authority that input services are not used to provide output services is not supported by any logic and shows non-application of mind. - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
1. Refund of Cenvat credit under Notification No. 5/2006-C.E. (N.T.)
2. Admissibility of refund due to export of services
3. Requirement of Service Tax registration at the time of export of services
4. Nexus of input services and output services

Analysis:

Issue 1: Refund of Cenvat credit under Notification No. 5/2006-C.E. (N.T.)
The Revenue appealed against the Order-in-Appeal sanctioning a refund of Rs. 10,64,216 under Notification No. 5/2006-C.E. (N.T.). Both sides consented to the appeal being taken up due to the need for verification of facts.

Issue 2: Admissibility of refund due to export of services
The Revenue contested the refund on the grounds that Service Tax registration was not obtained at the time of export of services, and input services were used for providing output services before registration. The lower authorities had not considered the question of limitation, and the Commissioner (Appeals) did not analyze the nexus of input services with output services.

Issue 3: Requirement of Service Tax registration at the time of export of services
The respondent argued that despite not having registration at the time of export, refund could be granted as input services were utilized for output services. The Tribunal cited precedents to support this contention and noted that the Notification did not mandate registration at the time of export for refund eligibility.

Issue 4: Nexus of input services and output services
The Tribunal found that all services were used for providing output services, disagreeing with the adjudicating authority's claim that input services were not utilized for output services. The Tribunal remanded the case for verification to ensure input services were indeed used for export services, directing a timely decision to prevent further delay for the respondent.

In conclusion, the Tribunal remanded the case for verification of input services utilization for export services, emphasizing the importance of timely resolution due to the prolonged duration of the matter.