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2018 (8) TMI 19 - AT - Service TaxRefund claim - service tax paid on the input services, which were used in output service, exported by the appellant - denial on account of nexus - Rule 5 of the CCR read with N/N. 27/2012-CE(NT) dated 18.06.2012 - Held that - Under the substituted Rule 5 of the rules, there is no requirement of showing the nexus between the input service and the output service provided by the assessee. Since the refund under the said amended rule is governed on the basis of receipt of export turnover to the total turnover, the establishing the nexus between the input and output service cannot be insisted upon for consideration of the refund application - refund cannot be denied - appeal allowed - decided in favor of appellant.
Issues:
Refund claim under Rule 5 of Cenvat Credit Rules, 2004 for service tax paid on input services used in output services exported by the appellant. Analysis: The appellant, engaged in taxable services, filed a refund application for service tax paid on input services used in exported output services. The original authority allowed a partial refund, rejecting the balance due to lack of nexus between input and output services. On appeal, the Commissioner (Appeals) further reduced the refund amount, citing the same reason. The appellant challenged this decision before the Tribunal. Upon hearing both sides and reviewing the records, it was noted that Rule 5 of Cenvat Credit Rules, 2004 was substituted in 2012, eliminating the requirement to establish a nexus between input and output services for claiming a refund. The Tax Research Unit clarified that duties or taxes paid on qualifying inputs or input services are entitled to be refunded based on the export turnover to total turnover ratio, without necessitating a direct correlation between input and output services. In light of the amended rule and the TRU clarification, the Tribunal found no merit in denying the refund to the appellant based on the lack of nexus between input and output services. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.
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