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2016 (9) TMI 142 - AT - Service TaxRefund claim CENVAT credit STP - consulting engineer service - discipline of computer hardware engineering or computer software engineering - no unutilized CENVAT credit could have existed as the credit column in the ST-3 returns pertaining to the period of refund claim was blank Held that - The export of software, in a 100% EOU, at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. The Tribunal has categorically held that even though export of software is not a taxable service but still the assessee cannot be denied the Cenvat credit. The assessee is entitled to the refund of Cenvat credit. This was held in the case mPortal India Wireless Solutions (P) Ltd v Commissioner of Service Tax, Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT refund eligible. Re-classification consulting engineer service - taxability Held that - there is no statutory provision by which a tax administrator can step in to rule that tax is not leviable, except on a claim by an entity to non-exigibility. There is no allegation of short-levy of tax against the appellant and the appellant has not made a claim that they are not liable to tax. The liability to pay tax having been accepted and the assertion that the taxable services are exempt only by reason of export having been accepted - Revenue cannot, take a stand that the service for which registration has been taken is not taxable appeal disposed off.
Issues Involved:
1. Eligibility for refund under Rule 5 of CENVAT Credit Rules, 2004. 2. Classification of services rendered by the appellant. 3. Compliance with procedural requirements for refund claims. 4. Scope and authority of tax administrators in re-classifying services. Issue-wise Detailed Analysis: 1. Eligibility for Refund under Rule 5 of CENVAT Credit Rules, 2004: The appellant sought refunds for unutilized CENVAT credit for services rendered during January 2006 to March 2006 and April 2006 to March 2007. The original authority rejected the claims on the grounds that no unutilized CENVAT credit existed as the ST-3 returns were blank and the services were classified under 'consulting engineer service' which was not taxable. The Tribunal found that the appellant, being an exporter of services, was entitled to CENVAT credit and refund under Rule 5, which allows refund of accumulated credit when input services are used for exported output services. The Tribunal emphasized that the provisions of Rule 5 do not insist on declaring the quantum of CENVAT credit in returns and that the appellant's eligibility for refund was substantiated by the burden of tax borne on input services. 2. Classification of Services Rendered by the Appellant: The lower authorities reclassified the services rendered by the appellant, asserting that they fell under 'consulting engineer service' which was not taxable due to specific exclusions. The Tribunal held that the appellant, registered under the Service Tax Rules, 1994, was recognized as a provider of taxable services. The Tribunal noted that the appellant's services, primarily related to 'maintenance and repair service,' were eligible for refund. The Tribunal criticized the lower authorities for exceeding their scope by re-examining the classification and denying refund based on non-taxability of services, which was not within their authority. 3. Compliance with Procedural Requirements for Refund Claims: The Tribunal found that the appellant had complied with the procedural requirements for claiming refunds. The appellant had maintained records of input services and their utilization, and the ST-3 returns clearly showed the value of exported services. The Tribunal noted that the non-declaration of CENVAT credit in returns did not affect the eligibility for refund, as Rule 5 does not mandate such a declaration. The Tribunal also highlighted that the appellant's meticulous documentation supported their claims for refund. 4. Scope and Authority of Tax Administrators in Re-classifying Services: The Tribunal criticized the lower authorities for attempting to reclassify the services rendered by the appellant and denying refunds based on this reclassification. The Tribunal emphasized that the primary obligation to determine tax liability lies with the service provider, and the tax authorities' role is limited to preventing tax evasion. The Tribunal found that the lower authorities had overstepped their authority by denying the appellant's status as a provider of taxable services and rejecting the refund claims based on reclassification. Conclusion: The Tribunal concluded that the denial of refund claims by the lower authorities lacked legal sanction and was arbitrary. The appellant was entitled to refunds under Rule 5 of CENVAT Credit Rules, 2004, as they had accumulated unutilized credit from input services used in exporting output services. The Tribunal allowed the appeals and directed the Assistant Commissioner to verify the computation of the claims and grant the refunds accordingly.
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