2017 (2) TMI 1075 - AT - Service Tax

100% EOU - Refund claim - rejection on the ground that the appellants are only registered under the taxable category of Information Technology Service and are not eligible for refund in respect of BPO services for which they are not registered - Rule 4A of Service Tax Rules, 1994 read with Sub-Rules (1) and (2) of Rule 9 of the Cenvat Credit Rules, 2004 - Held that - as per the Rules and the Notification No. 05/2006, dated 14-3-2006 it is not required to be registered under any specific category for claiming the refund as long as the service provider is registered with the Department - The appellants are into the business of IT and IT Enabled services and are not engaged in the business of Call centres, telecasters and customer care service, etc. They only provided technical online services based on the requirement of their client which would fall in the category of Information Technology Services for which they are already registered - Therefore, denial of refund of Cenvat credit is not justified. The other ground on which refund of Cenvat credit of ₹ 20,600/- is rejected because the invoice issued by BSNL is not in conformity with Rule 4A and Rule 9 of Cenvat Credit Rules, 2004 is also not justified - This rejection is not justified as the invoice contained all the details except the Service Tax Registration number of BSNL is not mentioned which according to me is only an inadvertent error as the Service Tax Registration number is mentioned in the invoice raised by BSNL for telephone connection. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of refund claim for three quarters
- Dismissal of appeals based on registration category
- Non-conformity with Rule 4A of Service Tax Rules, 1994
- Applicability of Cenvat Credit Rules, 2004
- Agreement with M/s. Tregaron India Holdings
- Export of services and receipt in foreign currency
- Utilization of input services and Cenvat credit
- Show cause notice and rejection of refund
- Appeal to Commissioner and subsequent rejection
- Legal justification of rejection and appeal arguments

Analysis:
The judgment addresses the rejection of a refund claim for three quarters by the Commissioner (Appeals) in a case where the appellant, registered under Information Technology Service, also provided services not registered under Business Support Services. The rejection was based on non-compliance with Rule 4A of Service Tax Rules, 1994 and Cenvat Credit Rules, 2004. The appellant had an agreement with M/s. Tregaron India Holdings to develop software solutions exported out of India, with consideration received in foreign currency. The appellant utilized input services and claimed Cenvat credit. The rejection was challenged, arguing that the rejection was wrong and illegal, emphasizing the appellant's registration under Information Technology Service and not exporting BPO services. The Commissioner's decision was questioned for not appreciating the factual and legal position.

The main issue revolved around whether the rejection of the refund claim due to the appellant not being registered under Business Support Services for BPO activity was legally justified. The judgment highlighted that being registered under a specific category was not mandatory for claiming a refund as long as the service provider was registered with the Department. Citing precedents, it was noted that denial of refund based on registration category was unsustainable. The appellant's services fell under Information Technology Services, and denial of Cenvat credit refund was deemed unjustified. Additionally, the rejection of Cenvat credit related to an invoice issued by BSNL was challenged. The judgment found the rejection unjustified as the invoice contained all necessary details except the Service Tax Registration number, which was considered an inadvertent error.

The judgment referenced cases where denial of Cenvat credit based on technical lapses or minor procedural formalities was not upheld. Ultimately, the impugned order was deemed unsustainable in law, and all three appeals of the appellant were allowed with consequential relief. The decision was pronounced in open court on a specific date, setting aside the previous order and granting relief to the appellant.