2017 (12) TMI 1496 - AT - Service Tax

Refund of unutilized CENVAT credit - input services or not - denial on the ground of nexus - All the services have been held to be input service in various decisions relied upon by the appellant and the details of the invoices have also been given along with the appeal memorandum - also, the original authority has committed computation error in determining the amount of refund which is eligible by wrongly applying the method for computation of refund - the original authority directed to recompute the refund amount in accordance with law - appeal allowed.

Summary

Issues:
Appeal against common impugned order for refund of unutilized CENVAT credit on input services in export of software development services.

Analysis:
The appellant filed five appeals against a common impugned order by the Commissioner (A) partially allowing the refund claim for unutilized CENVAT credit on input services used for exporting software development services. The original authority had sanctioned a portion of the refund claim but rejected the balance amount citing various grounds. The appellant contended that the rejected services fell within the definition of input services as per Rule 2(l) of CENVAT Credit Rules, 2004. The appellant argued that services like Business Auxiliary Service, Event Management Service, Management, Maintenance or Repair Service, Renting of immovable property service, Telecommunication Service, and Commercial Coaching and Training qualified as eligible input services based on wide interpretations provided in previous decisions. The appellant emphasized that these services were integral to business operations and commercially expedient. The appellant also highlighted that all services were exported outside India, with consideration received in foreign exchange, justifying the refund claim.

The appellant supported their argument by citing various decisions, including Sonus Networks India Pvt. Ltd. Vs. CST, GE India Exports (P) Ltd. Vs. CCE, Hyderabad, Xilinx India Tech Services Pvt. Ltd. Vs. CCE, Hyderabad, Knoah Solutions Pvt. Ltd. Vs. CCE, Megma Design Automation (I) Pvt. Ltd. Vs. CCE, and CCE Vs. Tavant Technologies India Pvt. Ltd. The appellant challenged the rejection of refund based on lack of nexus and non-conformance to Rule 4A for certain invoices, asserting that the original authority made computation errors and violated Circular No.828/5/2006 issued by the Board under Rule 5 of CENVAT Credit Rules, 2004. The learned Commissioner (A) upheld the Order-in-Original for some services due to lack of furnished documents and non-conforming invoices.

After considering submissions and cited decisions, the Hon'ble Judicial Member found the impugned order unsustainable in denying the refund for certain input services. The Member noted that all services had been recognized as input services in previous decisions relied upon by the appellant, with detailed invoice information provided. Additionally, a computation error was identified in determining the eligible refund amount. Thus, all five appeals were allowed, directing the original authority to recompute the refund amount in compliance with the law after granting the appellant an opportunity for a hearing.

The appeals were disposed of with the operative portion of the order pronounced in Open Court on 27.10.2017.