2016 (2) TMI 313 - AT - Service Tax

Refund of unutilized cenvat credit - export of services - distinguish between the refund claims as those prior to registration and those post-registration - Held that - In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. - Refund allowed.

Issues Involved:
1. Eligibility for refund claims under Rule 5 of the CENVAT Credit Rules, 2004.
2. Compliance with Notification 5/2006-CE (NT) dated 14/03/2006.
3. Registration status and its impact on refund eligibility.
4. Segregation of input services for registered and unregistered premises.
5. Precedent cases and their applicability to the current case.

Detailed Analysis:

1. Eligibility for Refund Claims under Rule 5 of the CENVAT Credit Rules, 2004:
The appellant, operating under the Software Technology Parks (STP) scheme, primarily exports IT/ITeS services and avails CENVAT credit on input services. They sought a refund of the unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004, which allows refund of accumulated credit when the output services are exported. The lower authorities rejected the refund claims, leading to this appeal.

2. Compliance with Notification 5/2006-CE (NT) dated 14/03/2006:
The impugned order noted that the appellant did not comply with the conditions of Notification 5/2006-CE (NT), which restricts eligibility for refund to the extent of unutilized credit attributable to exports. The appellant failed to provide supporting documents indicating the extent of unutilized credit specifically attributable to exports, leading to the rejection of the refund claim.

3. Registration Status and Its Impact on Refund Eligibility:
The impugned order distinguished between refund claims prior to and post-registration. The appellant registered for 'banking and other financial services' on 5th October 2006 and added 'business auxiliary services' and 'business support services' on 7th May 2007. The refund claims for the period from 5th October 2006 to 7th May 2007 were rejected on the grounds that credit availment is contingent upon the inclusion of output services in the registration. The Tribunal, however, referred to the decision in mPortal India Wireless Solutions Pvt. Ltd. vs. C.S.T. Bangalore, which held that there is no statutory requirement for registration as a condition precedent for claiming CENVAT credit.

4. Segregation of Input Services for Registered and Unregistered Premises:
The impugned order found that the appellant did not segregate common input services related to registered services and those from unregistered premises. This lack of segregation was cited as a reason for rejecting the refund claims. The Tribunal, however, emphasized that input services used in relation to business activities are covered under the definition of input services, and the appellant's failure to segregate does not invalidate their claim.

5. Precedent Cases and Their Applicability to the Current Case:
The appellant cited several precedent cases, including Commissioner of Service Tax, Mumbai II vs. J P Morgan Services India Pvt. Ltd., which supported the admissibility of input services used for providing exported services. The Tribunal upheld the appellant's reliance on these cases, affirming that input services used in providing export services are eligible for refund under Notification 5/2006-CE (NT). The Tribunal also noted that the appellant's late registration does not bar them from claiming CENVAT credit, as established in mPortal India Wireless Solutions Pvt. Ltd. vs. C.S.T. Bangalore.

Conclusion:
The Tribunal found merit in the appellant's arguments and precedent cases, concluding that the impugned order lacked validity. The appeal was allowed with consequential relief, affirming the appellant's eligibility for the refund claims under Rule 5 of the CENVAT Credit Rules, 2004, despite the issues raised regarding compliance with Notification 5/2006-CE (NT), registration status, and segregation of input services.

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