2017 (3) TMI 69 - AT - Service Tax

Refund claim - denial on account of nexus and that no export has taken place from the Gurgaon unit (branch office), as such, no refund was allowed on input services availed at Gurgaon unit - Held that - the appellant has been raising the export invoices only at Bangalore unit as it has a centralized accounting and billing system in force and the same is permissible u/r 4 of the Service Tax Rules, 1994 - Further in the SOFTEX return, only export of software services is disclosed, as the Bangalore unit is registered as a software technology park of India. The BAS provided from Gurgaon unit is not disclosed in the monthly SOFTEX filed with the STPI as the Gurgaon unit is not registered with Software Technology Park. Therefore, only on this ground the refund is wrongly rejected. As far as lack of nexus with regard to the input service viz., parking and cafeteria rent; building maintenance and housekeeping; book keeping; financial services; internet and telephone services, all these services are necessary for running of the business and are held to be input services - these input services fall in the definition of input service and the appellants are entitled to refund of the same. Appeal remanded with a direction to the original authority to consider all the documents which may be produced by the appellant in proof of export of service from their Gurgaon unit - appeal allowed by way of remand.

Summary

Issues:
Refund claims under Rule 5 of CENVAT Credit Rules, 2004 rejected due to lack of export from Gurgaon unit and nexus between input and output services.

Analysis:
The appellants filed 15 appeals against the rejection of refund claims under Rule 5 of CENVAT Credit Rules, 2004 due to the absence of exports from the Gurgaon unit and the alleged lack of nexus between input services received and output services exported. The Commissioner (A) had dismissed the claims, leading to the current appeals consolidated under a common order.

The appellant, a private limited company, engaged in exporting ITSS and BAS to its parent company, filed various refund claims under Rule 5 of CCR read with Rule 5 of 2006. The Assistant Commissioner of Service Tax rejected the claims stating no export occurred from the Gurgaon unit, and the nexus between input and output services was not established. The Commissioner (A) upheld these rejections, prompting the appeals.

During the hearing, the appellant argued that the orders contravened legal precedents and statutory provisions. They highlighted centralized registration at the Bangalore unit, where export invoices were raised despite services being provided from both locations. The appellant contended that services like maintenance, repairs, and other rejected input services fell within the broad definition of input services, citing relevant case law.

The respondent reiterated the lower authorities' findings, emphasizing the lack of evidence supporting exports from the Gurgaon unit and non-disclosure of BAS turnover in the monthly SOFTEX filings. However, the Tribunal found the rejection of refunds based on non-disclosure of BAS turnover and the lack of nexus to be legally unsustainable.

The Tribunal ruled in favor of the appellant, noting that export invoices from the Bangalore unit were permissible under Rule 4 of the Service Tax Rules, 1994. It found that BAS from the Gurgaon unit was not disclosed in SOFTEX due to its non-registration as a Software Technology Park. The Tribunal held that the rejected input services were essential for business operations and fell within the definition of input services based on cited decisions.

Consequently, the appeals were allowed, remanding the case for further consideration. The original authority was directed to assess export documents from the Gurgaon unit and quantify the refund claims in line with the Tribunal's findings and relevant conditions specified in a Board Circular.

In conclusion, the Tribunal's decision favored the appellant, emphasizing the legality of centralized billing, the necessity of rejected input services, and the need for proper consideration of export documentation for refund claims.