2016 (8) TMI 990 - AT - Service Tax

Cenvat credit - Rejection of refund claim export of services - rule 5 CENVAT credit CCR availed before Service Tax Registration Held that - the issue is no more res-integra and is already decided in the number of cases mPortal India Wireless Solutions P. Ltd Vs. CST Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT. The registration is not the sole criteria for granting refund, so long the other conditions are satisfied, refund shall be granted refund allowed. Disqualification as input services no nexus with output service Held that - It is observed that adjudicating authority has not carried out certain exercise like issuance of SCN etc., and straight away held in the proceedings of refund matter that the various input services are not admissible. This is completely illegal on the part of adjudicating authority. It was held in the case Coca cola India Pvt Ltd Vs. CCE Pune III 2009 (8) TMI 50 - BOMBAY HIGH COURT that the services used for business activity are admissible input services and credit is allowed on such services all the services are input services refund allowed. SEZ services consumed in SEZ services provided in relation to authorized operation in SEZ Held that - It is option available to the service provider either to pay service tax or provide the service under exemption available to the SEZ Unit. The inputs service were received on payment of service tax. Output services exported refund allowed. Time-barred filed after one year from the date of exports Held that - refund was sought under Rule 5 which itself provided that refund claim is compulsorily to be filed on quarterly basis. As per this provision appellant is not allowed to file refund before completion of particular quarter, Period of one year therefore should be calculated from the last date of the quarter appellant filed refund claim within one year from the last day of the quarter refund allowed. Absence of original documents Held that - if the Adjudicating authority has any doubt, he may call for the original documents, in that event appellant should submit original documents as and when required matter remanded appellant to be given opportunity of being heard appeal allowed decided in favor of appellant.

Summary

Issues Involved:
1. Cenvat credit availed before obtaining Service Tax registration.
2. Admissibility of various services as input services and their nexus with output services exported.
3. Services consumed in SEZ and their eligibility for refund.
4. Refund claims being time-barred.
5. Non-submission of original documents in support of refund claims.

Detailed Analysis:

1. Cenvat Credit Availed Before Obtaining Service Tax Registration:
The Tribunal held that the issue of availing Cenvat credit before obtaining service tax registration is no longer res-integra. The registration is not the sole criterion for granting a refund. As long as the input service is used in the output service exported, the refund cannot be denied merely because the registration was not obtained. This position has been upheld in various judgments cited by the appellant, including mPortal India Wireless Solutions P. Ltd Vs. CST Bangalore and Textech International (P) Ltd Vs. CST, Chennai.

2. Admissibility of Various Services as Input Services and Their Nexus with Output Services Exported:
The adjudicating authority's action of denying Cenvat credit on the basis of the admissibility of input services in the refund proceedings was deemed incorrect. Independent proceedings, including the issuance of a show cause notice, are required to determine the admissibility of Cenvat credit. The Tribunal referenced multiple judgments to conclude that the disputed services, such as Business Support Services, Internet Commissioner Service, and others, qualify as input services. It was emphasized that these services were used for the business activities of the appellant and not for any individual benefit, thus making them eligible for Cenvat credit.

3. Services Consumed in SEZ and Their Eligibility for Refund:
The Tribunal found that Rule 5 does not restrict the refund of service tax paid on services received for SEZ units. Service providers have the option to either pay service tax or provide services under exemption available to SEZ units. Since the input services were received on payment of service tax, they are refundable under Rule 5, irrespective of their consumption in SEZ.

4. Refund Claims Being Time-Barred:
The Tribunal held that the refund claims were not time-barred. Rule 5 mandates that refund claims be filed on a quarterly basis, and the period of one year should be calculated from the last date of the quarter. The appellant filed the refund claims within one year from the last day of the respective quarters, making them timely.

5. Non-Submission of Original Documents in Support of Refund Claims:
It was noted that if the adjudicating authority had any doubts regarding the documents, they could request the original documents from the appellant. The appellant should then submit the original documents as required.

Conclusion:
The Tribunal concluded that the claims were wrongly rejected on unsustainable grounds. The impugned orders were set aside, and the matter was remanded to the original adjudicating authority for reprocessing the refund claims after verification of documents, considering the Tribunal's observations. The appellant should be given sufficient opportunity for a personal hearing and submission of documents. The appeals were allowed by way of remand.