2015 (12) TMI 217 - AT - Service Tax

Refund claim - Business Auxiliary Services - non furnishing of the documentary evidences - Unutilized CENVAT Credit - Export of services - Held that - Refund claim could have been clearly identified as relatable to the consideration received as a result of product support service agreement. The appellants have produced some sample invoices and from one of the invoices, we clearly find that the invoice not only shows that appellant had billed for product support service fee but had also mentioned the agreement dated 1st July, 2002 in the invoice also. In spite of this, it is not known how the learned Commissioner (A) has come to the conclusion that territory shall mean the region of India as stipulated in the agreement . We find that in product support services agreement, it is clearly provided that territory shall mean worldwide. When according to the agreement both the parties have to understand that territory means worldwide how an inference could be drawn that territory means region of India could not be understood. - appellants are providing product support service from India and according to the agreement the product support services shall include standard MSFT product support services for products which are generally made available to end-users in the territory and shall include requests for support originating from within the territory. Products support services shall include phone, e-mail, web based and onsite support for all MSFT products. It cannot be said that services have been used in India. - Decided in favour of assessee.

Summary

Issues:
Refund claim under Notification No. 5/2006-C.E. (N.T.) for unutilized Cenvat credit balance - Rejection of refund claim on the ground of services provided and used in India.

Analysis:
The appellant, a 100% EOU registered under Service Tax for 'Business Auxiliary Services,' filed a refund claim for unutilized Cenvat credit balance. The claim was made for the period from October 2007 to March 2008, amounting to Rs. 1,92,71,780. A show cause notice was issued due to the lack of documentary evidence as required. Both lower authorities rejected the refund claim citing that the services provided were in India and used in India.

Upon hearing both sides, it was argued that the appellant had two units in India, one in Bangalore providing product support service to Microsoft Corporation and the other in Hyderabad providing research and development service to Microsoft Corporation Ltd. The original authority went beyond the scope of the show cause notice by concluding that the services were not used outside India. The Commissioner (A) did not address this issue in the impugned order, leading to a lack of clarity.

Further examination revealed that the refund claim was related to the consideration received from a product support service agreement. Sample invoices provided by the appellants clearly indicated billing for product support services on a global scale, contrary to the lower authority's interpretation restricting the territory to India. The agreement specified the territory as worldwide, encompassing all MSFT product support services. As the services provided included support for products available globally and requests from worldwide locations, it was evident that the services were not solely used in India. The rejection of the appeal based on unsustainable grounds led to the allowance of the appeal with consequential relief to the appellants.

In conclusion, the Tribunal found that the services provided by the appellant were not limited to India, as per the global nature of the product support services agreement. The misinterpretation of the territory clause in the agreement led to the rejection of the refund claim, which was deemed unsustainable. The appeal was allowed, providing relief to the appellants based on a thorough analysis of the contractual terms and the global scope of the services rendered.