2019 (1) TMI 1241 - AT - Service Tax

Refund of CENVAT Credit - export of output service - rejection on the ground that the applicant /appellant has failed to fulfil the condition of the Notification No.27/2012 dated 18.06.2012, for the reason that the details of the Cenvat Credit were not appearing in the ST-3 Return for the period October, 2015 to December 2015 and no concrete evidence was submitted with the claim that cenvat credit is available to them - Held that - What is to be determined to ascertain the eligibility of refund, is the balance of credit lying with the assessee, as on the last date of quarter as well as on the date of filing of the refund. To check the balance lying with the assessee the relevant documents are the accounts of the assessee in the form of balance sheets, bills & invoices. Though whatever balance is being shown in the accounts of the assessee has to find mention in the ST-3 but due to the said documents being the basis of ST-3 as far as the amounts shown therein as balance is concerned, I am of the opinion that ST-3 cannot be the only reliable record to verify the balance cenvat credit at the end of the quarter, as is held by the adjudicating authority below. It is apparent from the record that the appellant herein, after it came to his notice that ST-3 return for the impugned period is showing Nil balance, had requested the Department vide their letter dated 28.12.2016 and subsequently vide letter dated 16.01.2017 to permit the submission of revised ST-3 return for the impugned period so as to rectify the mistake of cenvat credit figures, but the same has been denied by the Department - In the present case, the ST -3 is showing nil balance, whereas the voluminous documents of the appellant are showing the balance of ₹ 6,43,603/- lying in the account for the impugned period. In such circumstances, Rule 7 B is merely procedural in nature. ST-3 return as the sole document to verify the balance - Held that - The mistake in ST-3 return was a rectifiable mistake - This Tribunal in the case of Serco Global Services Pvt. Ltd. vs. Commissioner of Central Excise, Delhi-III 2015 (6) TMI 270 - CESTAT NEW DELHI has held that even if ST-3 return for a particular period do not show any unutilized balance of cenvat credit, the refund still is to be granted on the basis of cenvat credit available in cenvat credit account and not on the basis of closing balance of cenvat credit shown in ST-3 return. The findings of Commissioner (Appeals) are held to lack the appreciation of all the documents as were relied upon by the appellant and based whereupon revision of ST-3 return inadvertently showing balance as nil, was proposed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of refund claim based on alleged non-fulfillment of conditions of Notification No.27/2012
- Discrepancy in ST-3 return leading to rejection of refund claim
- Request for submission of revised ST-3 return denied by authorities
- Interpretation of Rule 7 B of Service Tax Rules in relation to filing revised ST-3 return
- Applicability of case laws in similar situations

Analysis:

The case involves an appeal against the rejection of a refund claim by the Commissioner (Appeals) based on the alleged non-fulfillment of conditions of Notification No.27/2012. The appellant, a service provider, exported services without paying service tax and claimed a refund of ?6,43,603. The rejection was primarily due to the discrepancy in the ST-3 return, which showed a nil balance, leading to the conclusion that the condition of the notification was not met. The appellant argued that the rejection solely based on the ST-3 return was inappropriate, as they had submitted relevant documents, including a certificate from a Chartered Accountant certifying the accumulated cenvat credit. The appellant's request to submit a revised ST-3 return was denied by the authorities, citing Rule 7 B of the Service Tax Rules, which allows revisions within 90 days electronically.

The appellant contended that the denial of the request to revise the ST-3 return was unjustified, as they had substantial evidence supporting the revision. The Tribunal opined that a mere procedural lapse should not be a reason to deny substantive relief to the appellant, citing legal precedents emphasizing the importance of justice over procedural technicalities. The Tribunal also highlighted the case law that supports the rectifiability of mistakes in ST-3 returns and the granting of refunds based on the actual cenvat credit available, not solely on the ST-3 return figures.

Ultimately, the Tribunal found that the rejection of the refund claim lacked proper consideration of all relevant documents submitted by the appellant. The order under challenge was set aside, and the appeal was allowed, emphasizing the importance of assessing refund claims based on the actual documents supporting the credit taken, the nature of services provided, and their utilization in output services. The Tribunal's decision underscores the need for a holistic evaluation of refund claims beyond mere procedural errors in returns.