2017 (4) TMI 563 - HC - Service Tax

Refund of cenvat credit for the period prior to registration of Assessee - Held that - We do not find anything in the aforesaid rules which require registration as a condition or eligibility to claim refund. Even Form-A no where suggests that any such condition must be observed. Moreover, if refund is otherwise admissible to a party by a Tax Department, interpretation to the Statute which justify refund to the party must be given for the reason that State or Tax Department cannot be expected to retain Revenue which legally is refundable to the party. It should not be allowed to be retained when legally Revenue is not entitled to such money. Moreover, in Formica India Division v. Collector of Central Excise - 1995 (3) TMI 98 - SUPREME COURT OF INDIA Court has also observed that refund should not be denied on technical grounds. - Decided against the Revenue.

Summary

Issues:
1. Denial of refund to the Assessee for the period prior to registration with the Department.
2. Interpretation of rules regarding refund of Cenvat credit.
3. Justifiability of denying refund based on non-registration.

Analysis:
Issue 1: The appeal arose from a judgment by the Tribunal rejecting the Revenue's appeal against the Commissioner's order allowing a refund to the Assessee for the period prior to registration with the Department. The Counsel for the appellant argued that since the Assessee was not registered during the claim period, no refund could be claimed. However, the Tribunal followed a Karnataka High Court judgment stating that registration with the Department is not a prerequisite for claiming Cenvat credit, thus refund cannot be denied solely based on non-registration.

Issue 2: The Assessee, engaged in Information Technology Software Services, filed an application for refund for a specific period. The Assistant Commissioner rejected the application citing non-registration during the claim period. However, the Commissioner (Appeals) allowed the appeal, emphasizing that registration was not mandatory for claiming Cenvat credit for tax paid on inputs used for export services, supported by relevant case laws and Tribunal decisions.

Issue 3: The Counsel for the appellant presented rules regarding refund of Cenvat credit, highlighting that there is no requirement of registration as a condition for claiming a refund. The Karnataka High Court's judgment emphasized that in the absence of a statutory provision mandating registration for claiming Cenvat credit, the denial of refund based on non-registration was unjustified. The Court also cited a Supreme Court case stating that refund should not be denied on technical grounds and must be granted if legally permissible.

In conclusion, the High Court dismissed the appeal, affirming that denial of refund solely based on non-registration was not justifiable as per the rules governing Cenvat credit refund. The judgment highlighted the importance of interpreting statutes in favor of the Assessee when there is ambiguity, ensuring that legally refundable revenue is not retained by the Tax Department. The Court's decision aligned with the principle that refund should not be denied on technical grounds, especially when there are multiple interpretations available within the legal framework.