2015 (8) TMI 810 - AT - Service Tax

Refund of unutilized CENVAT Credit - Export of exempted service - revenue contended that input services are not eligible service - Advisory services - back office operation - in the nature of export of service or not - Held that - The grounds of rejection dismissed for the reason that the two conditions under Rule 3(2) of Export of Service Rules being satisfied as discussed in the preceding paragraph, there is no doubt that there have been export of service by the respondent assessee. With regard to the back office support provided in India to its client located outside India - This issue has been decided by the Division Bench of this Tribunal in the case of Commissioner of Central Excise, Hyderabad Vs. Deolite Tax Services India Pvt. Ltd. 2008 (3) TMI 35 - CESTAT, BANGALORE , wherein the back office service provided by the Deolite to their client situated outside India was held to be export of service in the nature of Business Auxiliary Services. Place of Use of service - In case of remittance of money by a person located outside India through a Banker of Remitter located outside India to a person in India. In such case, the transaction relating to the services provided by the Indian company (counterpart) by way of delivering the money in India to the receiver of the money is a service rendered to the client located outside India, who is the receiver of service, having paid for the said services. - impugned appellate order is fit to be upheld - Decision in the case of Paul Merchants Ltd. Vs. Commisisoner of Central Excise, Chandigarh 2012 (12) TMI 424 - CESTAT, DELHI (LB) - Decided against Revenue.

Summary

Issues:
Refund claims on unutilized CENVAT Credit for exported services.

Analysis:
The respondent assessee provided advisory and back office support services to foreign firms, classified under Banking and Financial Service (BFS) and Business Auxiliary Services (BAS) respectively. The services were delivered to clients outside India and used for decision-making processes related to investments. The respondent filed refund claims for unutilized CENVAT Credit, which were initially rejected by the Assistant Commissioner of Service Tax. The Commissioner (Appeals) later allowed the refund, citing CBE&C Circular and clarified conditions for services to be treated as export of services. The Revenue challenged this decision on grounds including the location of service use and related party relationships.

The appellate tribunal examined the conditions under Export of Service Rule, 2005, determining that services qualified as exports since the recipients were located outside India and payments were received in convertible foreign exchange. The tribunal dismissed the Revenue's arguments regarding service use in India and related party relationships, emphasizing compliance with export rules. The tribunal also referenced previous decisions supporting the export status of back office services provided by the respondent to foreign clients.

The Revenue's contentions regarding misinterpretation of circulars were refuted, relying on clear guidelines in the Export of Service Rules. The tribunal upheld the impugned appellate order, dismissing the Revenue's appeals and directing the refund to the respondent with interest. The decision highlighted the clarity and unambiguity of the rules, emphasizing the importance of following established legal principles and precedents in determining the export status of services.

In conclusion, the appellate tribunal affirmed the Commissioner (Appeals) decision to grant the refund of unutilized CENVAT Credit to the respondent for exported services. The judgment emphasized adherence to legal provisions and established precedents in determining the eligibility for service tax refunds, ultimately ruling in favor of the respondent and directing the concerned authority to process the refunds promptly.