2019 (1) TMI 1104 - AT - Service Tax

Refund of unutilized CENVAT Credit - refund denied on the ground that various services were used primarily for the personal purpose and not for accomplishing the purpose of business of the appellant - Held that - On perusal of adjudication order dated 31.10.2017, it is found that CENVAT Credit of ₹ 15,68,635/- disallowed by the Commissioner (Appeals) was part and parcel of the refund claim of ₹ 8,92,23,680/-, which was sanctioned by the refund sanctioning authority. Thus, there was no scope or occasion on the part of appellant to agitate such matter before the Commissioner (Appeals). In fact, the appellant had never raised this point at the time of filing the appeal before the Commissioner (Appeals). Thus, it transpires that the Commissioner (Appeals) has travelled beyond the scope of the original records in arriving at a conclusion that the appellant should not be eligible for refund benefit of ₹ 15,68,635/-. There is no material available on record to show that Revenue has contested the case of allowing the refund benefit by the original authority to the tune of ₹ 15,68,635/-. Thus, at this juncture, Revenue cannot contest such refund benefit allowed by the original authority - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund application for service tax on exported services; Denial of refund for certain input services; Appeal against denial of refund; Scope of appeal before Commissioner (Appeals); Disallowance of refund for personal consumption of employees; Jurisdiction of Commissioner (Appeals).

Analysis:
The case involves a service provider engaged in taxable services like Information Technology Services and Consulting Engineer Service, who exported such services during the disputed period. The appellant filed a refund application for ? 9,05,05,007 under Rule 5 of the Cenvat Credit Rules, 2004. The department allowed a refund of ? 8,92,23,680 but rejected ? 12,81,357 citing 'Banking and Finance Services' as not meeting the input service definition and lack of invoice copies. The original authority granted the refund based on the ratio of input services used for exported output service.

The appellant appealed the denial of ? 12,81,357 to the Commissioner (Appeals), who allowed the refund, considering Banking and Finance services as valid input services and non-submission of invoices as a procedural issue not justifying denial. However, the Commissioner (Appeals) disallowed a refund of ? 15,68,635, stating the services were used for personal consumption, falling under the exclusion clause of input services.

During the appeal, the appellant argued that the ? 15,68,635 was part of the sanctioned refund amount and was not challenged before the Commissioner (Appeals), thus beyond the scope of adjudication. The Tribunal found that the Commissioner (Appeals) overstepped by denying this refund as it was part of the sanctioned amount, and the appellant did not raise this issue during the appeal process. Additionally, there was no evidence of Revenue contesting this specific refund benefit.

Consequently, the Tribunal set aside the Commissioner (Appeals) order, allowing the appellant's appeal. The judgment highlights the importance of staying within the scope of appeal and the need for Revenue to contest specific refund benefits during the adjudication process.