2017 (7) TMI 902 - AT - Service Tax

Refund of unutilised CENVAT credit - Rule 5 of the CCR 2004 read with N/N. 5/2006-CE dated 14.03.2006 and 27/2012-CE dated 18.06.2012 - Held that - the learned Commissioner (Appeals) has omitted to take note of the fact that the lower authority has already reduced the same while granting refund - the original authority has observed that the appellant is paying service tax as a provider of service for the rental income from the sublet premises and the original authority has come to the conclusion that the rental of immovable property service received towards sublet property also should be an input service for the appellant. Denying the refund on Renting of Immovable Property relating to the premises sub-letted is not sustainable and is hereby set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund disallowed on Renting of Immovable Property in relation to sub-let premises.

Analysis:
The appellants filed three appeals against the Commissioner of Central Excise (Appeals) disallowing the refund on Renting of Immovable Property for sub-let premises. The appellants sought a refund of unutilized cenvat credit on input services used for exporting taxable services under Cenvat Credit Rules 2004. The refund claims were based on specific periods with details provided in a table. The Assistant Commissioner initially rejected part of the refund claim but sanctioned part of it. The Commissioner (Appeals) then directed the Assistant Commissioner to appeal, resulting in the impugned order disallowing the refund on Renting of Immovable Property for sub-let premises.

The consultant for the appellants argued that the Commissioner (Appeals) erred in disallowing the refund and that the lower authority had already considered and reduced the rent paid for sub-let premises while granting the refund. The consultant emphasized that the rent for sub-let premises did not impact the refund claimed for export of taxable services. An affidavit from the company was presented to support this claim. On the other hand, the Assistant Commissioner supported the findings of the Commissioner (Appeals).

After hearing both parties and reviewing the records, it was found that the Commissioner (Appeals) had erred in denying the refund on Renting of Immovable Property for sub-let premises. The lower authority had already accounted for the rent paid on sub-let property while granting the refund. Additionally, the original authority had recognized the rental income from sublet premises as an 'input service' for the appellant. Therefore, the Commissioner (Appeals) decision was deemed unsustainable in law, and the appeals were allowed with consequential relief.

In conclusion, the judgment set aside the Commissioner (Appeals) decision to disallow the refund on Renting of Immovable Property for sub-let premises. The decision was based on the lower authority already considering and reducing the rent paid on sub-let premises while granting the refund, and recognizing the rental income from sublet premises as an 'input service' for the appellant. The appeals were allowed with consequential relief, if any.