2016 (5) TMI 1245 - HC - Service Tax

Cenvat Credit - Nexus between output service and input service - Whether the Tribunal did not examine the aspects as to the output services could be said as service or not and whether the Tribunal ought not have remanded the matter - Held that - at the relevant point of time, the service was not a service reckoned for the purpose of CENVAT credit followed by the decision of Karnataka High Court in the case of PR. Commissioner of Service Tax Versus Mportal (India) Wireless Solutions Pvt. Ltd. 2016 (4) TMI 409 - KARNATAKA HIGH COURT but the Tribunal did not consider the said aspect. Under the circumstances, we do not find that the matter would call for interference as sought to be canvassed. Also the Tribunal has relegated the matter for finding/ascertaining the nexus between input service and the output services which would be required to be examined by the authorities. When the Tribunal was satisfied that the matter deserves further examination on facts for finding out the nexus, by exercise of discretion, it cannot be said such exercise of discretion is perverse. As there is no substantial questions of law arise for consideration, no case is made out for our interference. - Decided against the revenue

Summary

Issues:
1. Tribunal remanded the matter to original adjudicating authority for deciding the admissibility of refund.
2. Tribunal's examination of whether output services could be considered as service.
3. Tribunal's exercise of discretion for remand.

Analysis:
1. The High Court heard the appeal against the Tribunal's order remanding the matter to the original adjudicating authority for deciding the admissibility of refund. The appellant contended that the Tribunal did not examine whether the output services could be classified as services and that the remand was unwarranted. The Court referred to a previous case where a similar contention was raised but not considered by the Tribunal. The Court noted that the Tribunal had exercised discretion to remand the matter for finding the nexus between input service and output services, which was deemed necessary. The Court found no grounds for interference and dismissed the appeal.

2. The Court addressed the appellant's argument regarding the classification of output services as services. The appellant relied on a previous decision to support their claim that CENVAT credit would be available for input services even if output services were non-taxable. The Court noted that certain services were identified as taxable under a specific clause of the Finance Act from a particular date. The Court observed that the Tribunal did not consider this aspect, but it was not possible to conclude that such services were not services at all. The Court also highlighted that the appellant had not raised this specific contention before the Tribunal. Ultimately, the Court found no grounds for interference on this issue.

3. The Court examined the Tribunal's exercise of discretion in remanding the matter to ascertain the nexus between input service and output services. The Court determined that the Tribunal's decision to further examine the matter for finding the nexus was a valid exercise of discretion. The Court concluded that no substantial questions of law arose for consideration, and therefore, no interference was warranted. Consequently, the Court dismissed the appeal, upholding the Tribunal's decision to remand the matter for examination.