2016 (11) TMI 838 - AT - Service Tax

Rejection of Refund claim - various input services - Rule 5 of the CENVAT Credit Rules, 2004 read with N/N. 5/2006-CE (NT) dated 14.03.2006 - Held that - the period involved is prior to 01.04.2011 when the definition of input services had a very wide ambit as it include the words activities relating to business. In various judgments of the Tribunal as well as High Courts the subject services have been held to be eligible for credit during the relevant period. In a recent judgment the co-ordinate bench of the Bombay Tribunal in the case of M/s Reliance Industries Ltd. Versus Commissioner of Central Excise & Service Tax, LTU, Mumbai, 2016 (8) TMI 123 - CESTAT MUMBAI has held the above services to be eligible for credit even post 01.04.2011. In view thereof, I hold that the rejection of refund claim on the ground that input services do not have nexus with the output services is against legal principles. Time bar - Held that - Section 11B of the Central Excise Act does not mention the relevant date in case of computation of time limit for refund claim filed for refund of service tax/export of services. The Hon ble High Court of Andhra Pradesh, in the case of CC, CE & ST, Hyderabad Vs Hyundai Motor India Engineering (P) Ltd., 2015 (3) TMI 1049 - ANDHRA PRADESH HIGH COURT has categorically held that the relevant date for calculating the time limit for grant of refund is the date of receipt of foreign exchange/consideration and not the date when the services were exported/provided. Following the judgment laid by the jurisdictional High Court I hold that the relevant date being the date of receipt of foreign exchange, the refund claim is filed within time. Therefore denial of refund is against law. The appellant is eligible for refund and rejection of the same is unjustified. The impugned order to the extent of rejecting the claim of ₹ 15,53,977/- is unsustainable. The impugned order to this extent is modified and the appeal is allowed on above terms with consequential reliefs, if any

Summary

Issues:
Refund claim rejection based on nexus between input and output services and time bar for refund claim.

Analysis:
The appellant filed a refund claim for service tax paid on input services for the quarter July 2010 to September 2010, amounting to ?29,12,096. The original authority granted a refund of ?9,54,319 and rejected the balance. The rejection was based on the lack of nexus between input services and exported services, as well as a time bar issue. The Commissioner (Appeals) upheld the original authority's decision, leading the appellant to appeal before the Tribunal.

The appellant argued that the input services were essential for the export business and challenged the rejection on the grounds of lack of nexus and time bar. The adjudicating authority had earlier appropriated an amount against the appellant's demand, which was not contested in this appeal. The appellant contended that the refund claim was wrongly rejected based on the computation of the time limit from the date of invoice instead of the receipt of foreign exchange.

The respondent, however, maintained that the rejection was justified due to the alleged lack of nexus between input and output services. The respondent also argued that as per Section 11B, the time limit for the refund claim should be calculated from the date of invoice or export of services, making the claim time-barred.

The Tribunal considered the arguments and legal precedents. It noted that during the relevant period, input services encompassed a broad range of activities related to business. Previous judgments supported the eligibility of the disputed services for credit. The Tribunal cited a recent case where similar services were deemed eligible even post a specific date. Consequently, the rejection based on the lack of nexus was deemed legally incorrect.

Regarding the time bar issue, the Tribunal referred to a High Court ruling specifying that the relevant date for time limit calculation was the receipt of foreign exchange, not the date of service export. Following this precedent, the Tribunal concluded that the refund claim was within the time limit, rendering the denial of refund unlawful.

In light of the above analysis, the Tribunal ruled in favor of the appellant, finding the rejection of the claim unjustified. The impugned order rejecting a portion of the claim was deemed unsustainable, and the appeal was allowed with appropriate relief granted.