2019 (11) TMI 1346 - AT - Service Tax

Refund of accumulated CENVAT Credit - Input services utilised for the services exported during the period 01/01/2011 to 31/03/2011 and 1/4/2011 to 30/6/2011 - Limitation for the purpose of filing refund claims in respect of unutilised credit of input services used in the export services - rejection of refund on various grounds namely the portion of refund claim is barred by limitation as the refund claim was filed beyond the period of one year from the date of export; the refund claim was not supported by certain documents listed; there is no nexus between input services on which credit was availed and the output service exported; the appellant has not produced concrete evidence in support of utilisation of input services in the export of service as required under Rule 5 read with Rule 2(1) of the CENVAT Credit Rules, 2001; the appellant did not state clearly whether the input services were totally used for export of services or were partially used and that the appellant had not fulfilled the eligibility criterion for refund of service tax paid on the input services used for providing taxable output service exported from the registered premises during the disputed period. HELD THAT - Larger Bench of this Tribunal in the case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. 2018 (2) TMI 946 - CESTAT BANGALORE has set the issue to rest by observing that the relevant date can be taken as end of the quarter in which FIRC is received since the refund claim is filed for the quarter. Thus, the relevant date for filing refund claims should be the end of the quarter in which FIRC are received. CBEC Circular dt. 19/01/2010 clarified as submitted by the appellant regarding the nexus and the manner to deal with the voluminous records - The appellants have also submitted that the learned Commissioner (Appeals) has not given any finding on various case laws cited by them and the lower authority has not given them enough time to submit the records sought for, though they have been given in CD form. We find that such an action by the lower authorities is clear violation of principles of natural justice. It is the bounden duty of the authorities to examine the claim of the appellants in view of the provisions of law, Departmental circulars and legal pronouncements in this regard. The authorities are expected to go through the records of the case and the submissions of the appellants to evaluate the claim of the appellants on nexus between input and output services and receipt of consideration - the issue needs to go back to the lower authorities to re-examine the issue. Appeal allowed by way of remand.

Summary

Issues:
Refund claims rejection based on limitation period and lack of supporting documents; Nexus between input and output services; Violation of principles of natural justice by lower authorities.

Analysis:
1. Limitation for Refund Claims: The appellants filed refund claims for accumulated CENVAT Credit of service tax paid on input services utilized for exported services. The original authority rejected the claims citing the limitation period, lack of supporting documents, and absence of nexus between input and output services. The Commissioner(Appeals) upheld the rejection, stating the claims were time-barred and lacked evidence of utilization as per CENVAT Credit Rules and relevant notifications.

2. Nexus Between Input and Output Services: The counsel for the appellants argued that the nexus between input and output services was not a valid ground for rejection as all conditions for refund eligibility were met. Referring to CBEC Circular No.120/01/2010-ST, they emphasized the one-to-one correlation requirement and the scrutiny of records. The appellants were asked to provide original FIRC certificates and correlation with export invoices, but the lower authorities rejected the claim before the appellants could comply, violating principles of natural justice.

3. Interpretation of Notification No.5/2006-CE NT: The appellants highlighted the holistic interpretation of the notification, outlining conditions for refund applications, including export turnover ratio, submission timelines, and the role of Deputy/Assistant Commissioner. They argued that the notification's safeguards and limitations should be considered comprehensively, not in isolation.

4. Judicial Precedents and Larger Bench Decision: The appellants cited the decision of a Larger Bench in the case of CCE Vs. Span Infotech (India) Pvt. Ltd., where the issue of limitation for refund claims was clarified. The Tribunal's ruling emphasized the end of the quarter in which FIRC is received as the relevant date for filing refund claims related to export of services, aligning with the objective of granting refunds for unutilized CENVAT credit.

5. Remand and Directions: The Tribunal, after considering the arguments and legal provisions, allowed the appeals by remanding the case to the original authority. The lower authorities were directed to re-examine the claims in light of the discussions and legal submissions, ensuring a fair evaluation of the nexus between input and output services and the receipt of consideration. The lower authority was instructed to decide on the matter within twelve weeks of the Tribunal's order receipt.