2016 (2) TMI 28 - AT - Service Tax

Cenvat credit and refund claim thereof for the period prior to registration - export of IT enabled services - nexus of input services with output services - Held that - there is no provision in law that Cenvat credit can be allowed only after registration of the unit, cenvat credit is allowed in respect duty suffered on input/input services and the said payment is nothing to do with the registration of the recipient of the services therefore registration cannot be made criteria to reject the refund claim. - lower authority could not have denied the Cenvat credit and refund thereof to the appellant on the ground of registration. Nexus between input and output services - Held that - On the ground that services have no nexus with the output service. In our view, firstly the appellant is engaged in export of 100% services and no part of the services is provided in India with this reason alone all the services which have been received and used by the appellant are deemed to have been used for providing output services which have been exported. Since there is no provision for domestic services, the ratio of services that how much related to export and how much related to domestic does not arise. Moreover, all these services as per its use explained in the appeal memo, we find that all the services are essential for providing the call center services. - appellant is entitled for refund except amounts of ₹ 3581/- and ₹ 2930/- subject to only verification of calculation of refund amount. Refund allowed - Decided substantially in favor of assessee.

Issues Involved:

1. Cenvat credit and refund claim prior to service tax registration.
2. Cenvat credit on input services used in exempted call center services prior to 1st March 2006.
3. Refund claim greater than the amount of service tax on the invoices.
4. Cenvat credit on bank statements under banking and other financial services.
5. Cenvat credit on services deemed to have no nexus with output service.

Issue-wise Detailed Analysis:

1. Cenvat Credit and Refund Claim Prior to Service Tax Registration:

The appellant contested the rejection of Cenvat credit and refund claims for the period before service tax registration, citing the Karnataka High Court judgment in mPortal India Wireless Solutions Pvt. Ltd. vs. CST Bangalore, which held that registration is not a prerequisite for availing Cenvat credit. The Tribunal agreed, finding no legal provision that restricts Cenvat credit to post-registration periods. The Tribunal reinforced this view with precedents, including Commissioner of Service Tax, Mumbai-II Vs. J.P. Morgan Services India Pvt Ltd. and Beico Industries Pvt Ltd Vs. CCE & ST, Vapi, confirming that the lower authority erred in denying the refund on this ground.

2. Cenvat Credit on Input Services Used in Exempted Call Center Services Prior to 1st March 2006:

The appellant argued that even though the output service was exempted, the refund of accumulated Cenvat credit on input services used for export should not be denied. The Tribunal upheld this argument, referencing judgments such as Dell International Services India P. Ltd. Vs. CCE, Bangalore and Zenta Pvt Ltd. Vs. CCE Mumbai, which supported the refund of input services used in exempted services exported out of India. The Tribunal emphasized that government policy aims to avoid exporting taxes, thus supporting the appellant's claim.

3. Refund Claim Greater than the Amount of Service Tax on the Invoices:

The appellant conceded this issue, agreeing not to contest the rejection of the refund claim amounting to Rs. 3581/-. The Tribunal upheld the rejection of this specific amount.

4. Cenvat Credit on Bank Statements under Banking and Other Financial Services:

The appellant argued that bank statements should be considered valid documents for Cenvat credit under the proviso to Rule 4A(i) of the Service Tax Rules, 1994. The Tribunal agreed, noting that the proviso allows flexibility in documentation for banking and financial services, thus supporting the appellant's claim for refund based on bank statements.

5. Cenvat Credit on Services Deemed to Have No Nexus with Output Service:

The appellant contended that all services received were essential for providing call center services, which were entirely exported. The Tribunal agreed, stating that since the appellant's services were 100% exported, all input services were deemed used for providing output services. The Tribunal referenced previous refund orders in the appellant's own case and similar cases where refunds were sanctioned for identical services. The Tribunal upheld the refund claims for all services except for dry cleaning services, for which the appellant did not press the claim, and thus, the rejection of Rs. 2930/- was maintained.

Conclusion:

The Tribunal concluded that the appellant is entitled to a refund except for the amounts of Rs. 3581/- and Rs. 2930/-, subject to verification of the refund amount calculation. The appeals were partly allowed in these terms.

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