2019 (4) TMI 732 - AT - Service Tax

Refund of service tax paid - rejection on the ground that refund claim was time barred and there was no nexus between input services and output services provided - N/N. 27/2012-C(NT) - Held that - The Learned Commissioner (Appeals) had given is finding that the refund claim was filed within the stipulated period of one year - the appellant is entitled to get the refund of unutilized Cenvat credit since no nexus is required to be established for export of services and the order of Commissioner (Appeals) in holding that no refund is payable to the appellant on the basis of erroneous application of the formula is required to be set aside. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of refund claim of unutilized Cenvat credit against export of services due to time bar, lack of nexus between input and output services, and zero export turnover.

Analysis:
The appellant, engaged in exporting consultancy engineering services, filed a refund claim of Rs.3,35,156/- for the period between October 2012 to March 2013, which was rejected mainly on the grounds of being time-barred, lack of nexus between input and output services, and zero export turnover. The Commissioner (Appeals) upheld the rejection despite the claim being within the limitation period, leading to the appeal to the Tribunal.

During the appeal, the appellant argued that the formula for refund computation was erroneously applied, resulting in a zero refund claim. They contended that export turnover should be multiplied by total credits on input services and divided by total turnover to determine the refund amount. The appellant cited judicial precedents to support their claim that no nexus needed to be established for export of services.

The respondent department justified the rejection by stating that the relevant date for refund in the case of export of services is the date of receipt of Foreign Exchange. They also argued against the refund claim for certain services and the computation of total turnover during the relevant period.

Upon review, the Tribunal found that the Commissioner (Appeals) erred in applying the formula, resulting in a zero refund amount. The Tribunal clarified that advance payments received for export of services should be considered, and the appellant was entitled to the refund of unutilized Cenvat credit. The order of the Commissioner (Appeals) was set aside, directing the respondent department to refund the amount within three months.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order and granting the appellant a refund of Rs.3,35,156/- for unutilized Cenvat credit accumulated against export of services.