2019 (11) TMI 384 - AT - Service Tax

Refund of unutilized and accumulated CENVAT credit of Service Tax paid - various input services availed by them which were used in providing output services exported without payment of Service Tax - Rule 5 of CCR, 2004 and Notification No.27/2012-CE (NT) dated 18.06.2012 - denial of refund claim on the ground of non-registration - denial also on the ground that copy of input invoice not available, ineligible input credit taken, address mentioned in the invoices is not in ST-2 and CENVAT debit towards refund claim is not done to the extent of ₹ 15,40,950/-.. Denial of refund on the ground of non-registration - HELD THAT - The denial of CENVAT credit on the ground of non-registration is not sustainable in law in view of the decision of Hon ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX 2011 (9) TMI 450 - KARNATAKA HIGH COURT . The said decision has been consistently followed by the Tribunal in many decisions - the denial of refund on this basis is set aside. Refund of KKC - Scope of SCN - HELD THAT - The KKC is eligible for CENVAT credit. Further, the Original Authority has not disputed the eligibility of KKC but the Original Authority has only rejected the refund on the ground that the appellant has not debited the same in the ST-3 Returns which is factually incorrect finding in view of the ST-3 Returns produced before me wherein it is clearly debited by the appellant - Further, the Commissioner in the impugned order has gone beyond the OIO and has examined the eligibility of KKC for CENVAT credit which is beyond the OIO and therefore cannot be sustained. The impugned order rejecting the refund is not sustainable in law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of refund of ?17,08,106/- by the Commissioner (Appeals).
2. Denial of CENVAT credit on various grounds including non-registration and KKC debiting.

Analysis:

Issue 1: Rejection of Refund
The appellant filed a refund claim of ?4,36,74,859/- for the period July 2016 to September 2016 seeking refund of unutilized and accumulated CENVAT credit. The Original Authority sanctioned a refund of ?4,17,82,099/- but rejected a portion of ?18,72,960/- citing reasons such as missing input invoice, ineligible input credit, incorrect address in invoices, and failure to debit CENVAT to the extent of ?15,40,950/-. The appellant appealed against this rejection, arguing that the address discrepancy was due to centralized registration and changes in premises duly updated in ST-2 Returns. The Counsel contended that registration is not a prerequisite for CENVAT credit as per CCR, 2004, citing relevant case law. The Tribunal agreed, setting aside the denial of refund based on non-registration grounds.

Issue 2: Denial of CENVAT Credit
Regarding the denial of CENVAT credit on Krishi Kalyan Cess (KKC), the Counsel argued that the appellant was eligible for the credit as per CENVAT Credit Rules, 2004, and relevant notifications. The Counsel highlighted the provisions allowing CENVAT credit for KKC and pointed out that the Original Authority's rejection was based on the appellant's alleged failure to debit KKC in ST-3 Returns, which was factually incorrect. The Tribunal concurred, emphasizing that the denial of refund on KKC grounds was unsustainable as the appellant had indeed debited KKC in their returns. The Tribunal also noted that the Commissioner had exceeded the scope of the Original Order in assessing the eligibility of KKC for CENVAT credit, rendering such examination beyond the jurisdiction of the Commissioner and therefore not sustainable in law.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order rejecting the refund, and ruled in favor of the appellant based on the legal analysis provided for both issues.