2019 (8) TMI 1659 - AT - Service Tax

Refund of Service tax - management consultancy service - exportation of service - rejection of refund on the ground that there is no nexus between the input services and output service provided by the appellant - HELD THAT - So far as taking of irregular cenvat credit or non-establishment of nexus between the input services and the output service is concerned the benefit of cenvat credit can be denied by taking recourse to Rule 14 of the Cenvat Credit Rules 2004 - Admittedly in the present case the provisions of Rule 14 ibid have not been invoked by the department. Since the appellant has complied with the requirement of Rule 5 ibid inasmuch as by adopting the formula prescribed in the said rule the refund claims were filed before the department denial of the refund benefit on the sole ground of non-establishment of nexus cannot be considered as justifiable reason for such denial. There are no merits in the impugned order passed by the learned Commissioner (Appeals) - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of service tax paid on input services due to lack of nexus between input and output services.

Analysis:
The appellant, engaged in providing advanced analytics services, filed refund applications for service tax paid on input services during April 2016 to September 2016. The original authority and the Commissioner (Appeals) rejected the refund applications citing a lack of nexus between input and output services. The appellant argued that since the department did not question the cenvat credit on disputed services and had complied with Rule 5 of the Cenvat Credit Rules, the refund should not be denied. The appellant also highlighted the absence of invoking Rule 14 of the Cenvat Credit Rules by the department. The appellant referenced relevant case laws supporting their position (MSCI Services Pvt. Ltd. vs. CCGST, CST, Mumbai-II vs. WNS Global Services, Walton Street India Real Estate vs. CCGST).

The Revenue, represented by the learned Authorized Representative, reiterated the findings of the impugned order denying the refund benefit based on the nexus issue. The Tribunal noted that the authorities denied the refund solely due to the lack of nexus between input and output services. However, the Tribunal emphasized that Rule 14 of the Cenvat Credit Rules, which could be used to deny cenvat credit, was not invoked in this case. Since the appellant had complied with Rule 5 by filing refund claims using the prescribed formula, the denial of refund solely on the nexus issue was deemed unjustifiable. The Tribunal found merit in the appellant's arguments supported by relevant case laws and concluded that the denial of refund based on the nexus issue was not justified. Therefore, the impugned order by the Commissioner (Appeals) was set aside, and the appeals were allowed in favor of the appellant.