2016 (2) TMI 240 - AT - Service Tax

Refund - correlation of input services with export of services - Held that - the matter is remanded to the original adjudicating authority to examine the refund claims of these appellants in the light of the principles laid down by the CESTAT s Interim Order in the case of Apotex Research Pvt. Ltd. 2013 (9) TMI 1087 - CESTAT BANGALORE - Decided partly in favor of revenue.

Summary

Issues Involved:
Sanction of refunds under Rule 5 of Cenvat Credit Rules for the respective periods for two different companies.

Analysis:
1. The appeals involved common issues related to the sanction of refunds under Rule 5 of Cenvat Credit Rules for specific periods for two different companies. The appeals were filed by the assessee(s) and cross-appeals by the Revenue against the orders-in-appeal. The matter primarily revolved around the rejection of refund claims for various input services by the assessee companies. The appeals were based on the contention that the input services had a correlation with the export of services, making them eligible for the refunds claimed.

2. The first company, M/s. Sitel Operating Co-operation India Ltd., argued that their refund claims for input services like Erection Commissioning and Installation Services, Travel Agent Services, Management Consultancy Services, Rent-a-Cab, Cargo Services, Outdoor Catering Services, and Convention Services were wrongly rejected. They cited specific case laws to support their claim. On the other hand, the Revenue, represented by the Commissioner of Service Tax Bangalore, filed a cross-appeal against the order-in-appeal passed by the Commissioner of Central Excise (Appeals-II) Bangalore. The Revenue contested the refund granted by the Commissioner (Appeals) for certain services, claiming it was not proper.

3. The second company, M/s. Dell International Services India Pvt. Ltd., challenged the partial rejection of their refund amount by the Commissioner. They argued that the services provided to a foreign company fell under Business Auxiliary Services and qualified as export of services under the Export of Services Rules 2005. The company asserted their entitlement to the credit of service tax paid on various inputs and input services, emphasizing that procedural shortcomings should not be a basis for denying Cenvat credit. Additionally, they contended that the Commissioner (Appeals) lacked the authority to remand the matter to the adjudicating authority.

4. In response to the appeals by M/s. Dell International Services India Pvt. Ltd., the Revenue filed a cross-appeal, disputing the classification of output services as IT Services and the eligibility for refund of input services used. The Revenue argued that the input services deemed eligible by the Commissioner (Appeals) did not have a nexus with the output services and, therefore, were not eligible for the refund of service tax paid for those input services.

5. After considering the arguments presented by both parties, the Tribunal remanded the matter to the original adjudicating authority for a reexamination of the refund claims in light of the principles established in a specific CESTAT's Interim Order. The original adjudicating authority was directed to make a decision within three months of receiving the order, allowing sufficient opportunity for the submission of required documents, evidence, and personal hearings to substantiate the claims of the appellants.

6. In conclusion, the appeals were decided in favor of a reexamination by the original adjudicating authority, emphasizing the need to adhere to the principles outlined in the relevant CESTAT's Interim Order for a fair and thorough evaluation of the refund claims.