2017 (3) TMI 242 - AT - Service Tax

Refund claim - sub-contract - the service tax credit if permissible, whether the appellant is entitled to the refund thereof? - what shall be the relevant date for filing the refund claim in the case of export of service by a software service exporter? - Held that - the adjudication order has not brought out that the service received from the sub-contractor for ultimate provision to the overseas service recipient was absent. There was an inextricable link between the input service and the output service. Therefore, the CENVAT credit in respect of service tax paid by the appellant to the sub-contractor makes the appellant eligible to claim that as a refund, if otherwise not deniable by law. The learned adjudicating authority shall count the limitation from the date of realization of the foreign exchange. Appeals are remanded to the adjudicating authority to complete the re-adjudication - appeal allowed by way of remand.

Summary

Issues:
1. Whether the appellant is entitled to CENVAT credit of service tax paid to a sub-contractor for services provided to a foreign recipient and if entitled, whether a refund is permissible.
2. Determination of the relevant date for filing a refund claim in the case of export of service by a software service exporter.

Analysis:

Issue 1:
The appellant argues that there is a direct connection between the service provided to a foreign recipient and the service processed by a sub-contractor, making them eligible for CENVAT credit and subsequently a refund. The appellant emphasizes that since they are engaged in exporting services, the service tax credit cannot be utilized, justifying the refund claim. The Revenue contests this by stating that since the appellant did not provide the service directly to the overseas recipient, they are not eligible for a refund. However, the Tribunal finds that there was a clear link between the input service from the sub-contractor and the output service, making the appellant eligible for the CENVAT credit and subsequent refund. The Tribunal also cites a previous judgment to support this position.

Issue 2:
Regarding the relevant date for filing a refund claim, the appellant argues that the date of realization of foreign exchange should be considered as per Notification No.14/2016-CE (NT). The Tribunal agrees with this argument, stating that the date of realization of foreign exchange is crucial for determining the limitation period for filing a refund application. It directs the adjudicating authority to calculate the limitation period from the date of foreign exchange realization. The Revenue raises concerns about services being provided from an unregistered premises, but since there is no conclusive finding on this matter, the Tribunal does not address it.

Conclusion:
The Tribunal remands all eight appeals to the adjudicating authority for re-adjudication by a specified date, focusing on the issues of the appellant's entitlement to CENVAT credit and refund for services provided through a sub-contractor and the determination of the relevant date for filing refund claims in the context of service exports. The Tribunal emphasizes the need for a thorough examination of factual aspects and the issuance of a reasoned order based on the evidence presented.