2015 (12) TMI 951 - AT - Service Tax

Denial of refund claim - tax paid on input services used for providing service exported - Agreement was with Silicon Valley Bank (SVB) whereas the service has been provided to M/s. SVB Financial Group - nexus between input service and output service - Export of output service - Held that - Management Consultancy service is nothing but study of Indian market and submission of a report to enable the customer to make a decision for making investment in India. - in the absence of any dispute that service was rendered to the recipient abroad as claimed by the appellant and receipt of consideration from recipient abroad, I do not consider that agreement plays such an important role that the refund claim itself has to be rejected. In any case, assignment clearly shows that the agreement has been transferred in favour of the present recipient. Nexus issue has to be held in favour of the appellant in accordance with law. Nevertheless on merit also, the appellant is eligible for the refund, in my opinion, since services made in Order-in-Original are covered by precedent decisions of this Tribunal and the decisions of various High Courts in the country. Only doubt is in respect of Cafeteria service where this Tribunal has taken a view that if any amount has been collected from employees, admissible amount to be reduced proportionately. In any case, when the original authority considers the refund claim, Cenvat credit attributable to Cafeteria can be reduced proportionately. - impugned order is set aside and the matter is remanded to the original authority to consider the refund claim - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection based on service recipient discrepancy, lack of nexus between input and output service, and non-export of output service.

Analysis:
1. Output Service Exported: The appellant claimed a refund for Service Tax paid on input services used for providing services exported. The rejection was based on the argument that the service was provided to a different entity than the one mentioned in the agreement. However, the appellant argued that the service provided was indeed exported, citing a precedent where services used by a recipient abroad in convertible foreign exchange are considered exported. The Tribunal agreed, noting the location of the recipient abroad and the applicability of Rule 3(ii) of Export of Services Rules, thus treating the output service as exported.

2. Agreement Discrepancy: Another ground for rejection was the absence of an agreement between the appellant and the recipient mentioned in the claim. The appellant presented an assignment transferring the earlier agreement to the present recipient. The Tribunal found that the service was rendered to the recipient abroad, with consideration received from abroad, and held that the absence of a specific agreement should not lead to claim rejection, especially when the assignment clearly showed the transfer of the agreement.

3. Nexus Between Services: While the original authority found no nexus between input and output services, the Commissioner (Appeals) did not address this issue in the appeal. Since the Revenue did not appeal this decision, the Tribunal held that the nexus issue must be in favor of the appellant. Additionally, the Tribunal noted that the appellant was eligible for the refund based on precedent decisions and High Court rulings, with only a minor concern regarding the cafeteria service, where any amount collected from employees should be proportionately reduced from the claim.

4. Remand and Settlement: The Tribunal set aside the impugned order and remanded the matter to the original authority for reconsideration of the refund claim in line with the observations made. The original authority was instructed to settle the refund claim within six months from the date of receipt of the order, considering the appellant's case adequately.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal and the reasoning behind the decision to remand the matter for further consideration.