2019 (11) TMI 1070 - AT - Service Tax

Refund of unutilized CENVAT credit paid - export of services - input services used for providing the Consulting Engineering Services exported during the impugned period - N/N. 5/2006-CE dated 14.3.2006 - Denial on the ground of nexus of input services with the output service - HELD THAT - Commissioner (A) has rejected the refund claims on certain services on the ground that there is no direct nexus between the input service and the output services which is not legally sustainable. The appellant have produced various decisions cited supra wherein all these services have been held to be input services and has nexus with the output service, therefore, the denial of refund on lack of nexus is not sustainable in law and therefore, the appellants are entitled to the refund on these input services - the appellant is also entitled to refund of CENVAT credit in respect of Commercial and Industrial Construction Service, Company Secretary and Public Relation Management Service being essential for rendering output service. Refund has been rejected on the ground of non-production of documents - HELD THAT - Case remanded back to the original authority who will examine the documents which may be produced by the appellants in support of their refund claims. Denial of refund on the basis of debit notes - HELD THAT - As far as denial of refund on the basis of debit notes in which the amount paid and services received are not clear. In view of the decisions, the debit note is a valid document for claiming CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004. Denial of refund on other procedural irregularities viz., that invoices does not contain address of the appellant - HELD THAT - Denial of refund on other procedural irregularities viz., that invoices does not contain address of the appellant is also not sustainable in law because the appellant is engaged in export of service and these services are essential for rendering output service. The matter is remanded back to the original authority for verification of the documents, invoices as well as the details in the debit notes; and thereafter, pass a fresh order and determine the eligible refund claim of the appellant - appeal allowed by way of remand.

Summary

Issues:
Refund rejection based on lack of nexus between input and output services; Denial of refund due to non-submission of documents; Rejection of refund on procedural irregularities.

Issue 1: Refund rejection based on lack of nexus between input and output services

The appellants filed refund claims seeking unutilized CENVAT credit for input services used in providing Consulting Engineering Services exported under Notification No.5/2006-CE. Show-cause notices were issued, leading to partial rejection of refund claims by the original authority and subsequent partial allowance by the Commissioner (A). The learned counsel argued that the rejection lacked legal sustainability as it did not appreciate the definition of 'Input Service' and binding judicial precedents. Various input services were listed where refund was rejected citing lack of nexus with output service. The counsel presented Tribunal decisions establishing these services as essential for output service provision, thus challenging the denial of refund based on nexus.

Issue 2: Denial of refund due to non-submission of documents

Refund claims were rejected on the grounds of non-submission of BAS invoices for various input services. The counsel acknowledged the absence of these invoices before the authorities but assured their availability for verification. Additionally, refund denial based on debit notes not clearly stating the amount paid and services received was challenged. Citing precedent cases, the counsel argued that debit notes are valid for claiming CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004.

Issue 3: Rejection of refund on procedural irregularities

The Commissioner (A) rejected refunds citing procedural irregularities, such as invoices lacking the appellant's address. The counsel contended that such denials were legally unsustainable, emphasizing the essential nature of these services for output provision in the context of service exportation. The order was critiqued for adding criteria not found in the Rules and misinterpreting legislative intent. Reference was made to a TRU Circular clarifying refund notification amendments and the Department's limited role in assessing CENVAT credit admissibility during refund claim adjudication.

Conclusion

The Tribunal found the denial of refunds on the lack of nexus between input and output services legally unsustainable. It held that the appellants were entitled to refunds for services essential for output provision. The case was remanded to the original authority for document verification and a fresh refund determination. The validity of debit notes for claiming CENVAT credit was affirmed, and denials based on procedural irregularities were deemed legally unsound. The judgment emphasized the essential nature of services for output provision in the context of service exportation and cautioned against adding criteria not prescribed in the Rules.