2017 (2) TMI 569 - AT - Central Excise

Refund of cenvat credit - 100% EOU - Business Auxiliary Service and/or Business Support Services - Held that - the Ruling of Hon ble Karnataka High Court in the case of mPortal India Wireless Solutions Private Ltd. Vs C.S.T. Bangalore 2012 (27) S.T.R. 134 (Kar.). The issue before the Hon ble High Court was whether revenue was justified in refusing to grant refund of Cenvat credit, to which the assessee was legally entitled to, on the ground that he is not registered with the Department the Hon ble High Court held that the assessee is 100% EOU and exported software at the relevant point of time, which was not a taxable service. However, the assessee had paid input tax on various services - Decided in favor of the assessee.

Summary

Issues:
1. Entitlement to refund under Rule 5 of CCR, 2004 read with Notification No.5/2006 for IT enabled services provided by a 100% EOU STPI.

Analysis:
The appeals by both the revenue and the assessee revolve around the eligibility of the respondent assessee, a 100% EOU STPI providing IT enabled services, for a refund under Rule 5 of CCR, 2004 read with Notification No.5/2006. The respondent assessee engaged in various IT services like Business Auxiliary Services, Repair and Maintenance of software, Business Support Services, and Consulting Engineering Services for software. The services were exclusively provided to overseas clients via online platforms. The assessee sought a refund of unutilized Cenvat credit, which was granted in one appeal but rejected in four others by the Assistant Commissioner and upheld by the Commissioner (Appeals).

The revenue, represented by the Assistant Commissioner, contested the refund claims, arguing that the respondent assessee, being a 100% EOU STPI, was not entitled to the refund for the services provided. On the other hand, the advocate for the assessee relied on a ruling of the Hon’ble Karnataka High Court in a similar case, emphasizing that the export of software by the assessee, though not a taxable service, did not preclude them from claiming Cenvat credit. The High Court held that the limitation under Section 11B did not apply to the refund of accumulated Cenvat credit, and registration with the Department was not a mandatory condition for claiming such credit under CCR, 2004.

The Tribunal, after considering the arguments, found that the issues raised were settled by the Karnataka High Court's ruling in favor of the assessee. The Tribunal noted that the revenue did not dispute the quantum of input tax credit taken by the assessee. Consequently, the Tribunal allowed the appeals of the assessee (Appeal Nos. E/2145-2148/2010) and directed the adjudicating authority to grant the refund within 45 days from the date of the order, along with applicable interest. The appeal filed by the revenue (Appeal No. E/2653/2009) was dismissed.