2017 (4) TMI 943 - HC - Service Tax

Refund of unutilized cenvat credit - export of services - unregistered premises - case of assessee is that in the absence of a statutory provision, prescribing that, registration of the premises was mandatory for availing input service tax credit, the Assessee could not be denied refund of unutilized cenvat credit on input services - Whether the decision of CESTAT i.e. Respondent No.1 in allowing refund of Cenvat credit even without registration is correct? - Held that - Mere perusal of Rule 5 of the 2004 Rules, would, inter alia, show that where a service provider, provides an output service, which is exported, without payment of service tax, he would be entitled to refund of cenvat credit, as determined by the formula provided in the Rule - Rule 5 of the 2004 Rules does not stipulate registration of premises as a necessary prerequisite for claiming a refund - refund allowed - appeal dismissed - decided against Revenue.

Issues Involved:
1. Whether the decision of CESTAT in allowing refund of Cenvat credit without registration is correct.
2. Whether CESTAT failed to consider the safeguards, conditions, and limitations in Notification No.05/2006-CE (NT).
3. Whether CESTAT correctly applied the judgment of the Karnataka High Court in mPortal Wireless Solutions Private Limited.

Issue-wise Detailed Analysis:

1. Refund of Cenvat Credit Without Registration:
The Tribunal followed the Karnataka High Court's judgment in mPortal India Wireless Solutions (P) Ltd. v. Commissioner of Service Tax, Bangalore, 2012 (27) S.T.R. 134 (Kar.), which held that in the absence of a statutory provision requiring premises registration for availing input service tax credit, the Assessee could not be denied a refund of unutilized Cenvat credit on input services. The Tribunal noted that it had followed this judgment in a previous case, KLA Tencor Software India Private Ltd. v. CST Chennai-III. The Tribunal concluded that the Assessee was entitled to the refund even though the premises were not registered.

2. Safeguards, Conditions, and Limitations in Notification No.05/2006-CE (NT):
This issue was not pressed before the Court as it did not arise from the impugned judgment and order. However, the Court examined Notification No.05/2006-CE (NT), dated 14.03.2006, and found that it only sets out the procedure for claiming a refund of unutilized input service credit. The notification does not stipulate that registration of the premises is mandatory for availing Cenvat credit. The relevant clauses of the notification were discussed, and it was concluded that the notification does not prohibit the grant of Cenvat credit if the premises are not registered.

3. Application of Karnataka High Court Judgment:
The Revenue argued that Rule 5 of the Cenvat Credit Rules, 2004, and Rule 4(2) and 4(3) of the Service Tax Rules, 1994, required registration of premises for claiming a refund. The Court examined these rules and found that Rule 5 of the 2004 Rules does not stipulate registration of premises as a prerequisite for claiming a refund. Similarly, Rule 4 of the 1994 Rules allows for optional registration of premises for centralized billing or accounting. The Court noted that the Assessee had obtained registration for its premises in 2009, and the non-registration issue pertained to an additional building taken on lease. The Court found no limitation in the rules that would deny a refund of unutilized Cenvat credit for export services due to non-registration of premises.

Supporting Judgments:
The Court referred to similar judgments by the Karnataka High Court in Commissioner of Service-Tax v. Tavant Technologies India Pvt. Ltd., 2016 (3) TMI 353, and the Allahabad High Court in Commissioner, Service Tax Commissionerate v. Atrenta India Pvt. Ltd., 2017 (2) ADJ 590. Both judgments supported the view that registration is not a mandatory condition for claiming a refund of Cenvat credit.

Distinguishing Case:
The Court distinguished the judgment in Commissioner of Central Excise, Coimbatore v. Sutham Nylocots, 2014 (306) E.L.T. 255 (Mad.), which dealt with the provisions of Section 11AB of the Central Excise Act, 1944, and involved factual findings against the Assessee regarding the fulfillment of statutory conditions for claiming a refund.

Conclusion:
The Court dismissed the appeal, agreeing with the views of the Karnataka and Allahabad High Courts that registration of premises is not a mandatory condition for claiming a refund of Cenvat credit. The appeal was dismissed with no order as to costs.

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