2020 (2) TMI 1001 - AT - Service Tax

Refund of accumulated CENVAT Credit - output services exported for the period April, 2016 to June, 2016 - Research Development Service - Garden Maintenance service - recruitment services - Rule 5 of Cenvat Credit Rules, 2004. Research Development Service - HELD THAT - The Research Development Service performed by the Appellant is export of service in terms of Rule 3 of Rules, 2012. Earlier also for the period July, 2012 to September, 2012, October, 2012 to December, 2012 and January, 2013 to March 2013, the said services were treated as export of services by the department and no relevant material has been placed on record to treat the same differently for the period in dispute - Therefore the Scientific and Technical Consultancy Services provided by the Appellant to DITC is to be treated as export of service. Rule 5 of Cenvat Credit Rules, 2004 was amended vide Notification No. 18/2012-CE (NT) dated 17/03/2012 and after amendment the said rule provides that the refund of Cenvat credit is allowed to service provider when the output service is exported. After amendment of the said Rule, no nexus is relevant between input or input services with the output service and therefore the present refund claim which relates to the period April, 2016 to June, 2016 is correctly availed by the Appellant for the aforesaid service - refund allowed. Garden Maintenance service - HELD THAT - The Principal Bench of the Tribunal in the matter of M/S HCL TECHNOLOGIES LTD VERSUS C.C.E. NOIDA 2015 (8) TMI 595 - CESTAT NEW DELHI held that the garden service qualified as input services and therefore following the said principle, this refund claim is allowed. Recruitment service - service was rejected on the ground that there is no nexus between the recruitment service and the output service provided by the Appellant - HELD THAT - A co-ordinate bench of the Tribunal in the matter of COMMISSIONER OF CENTRAL EXCISE PUNE-I VERSUS SAI LIFE SCIENCES LTD. 2016 (2) TMI 724 - CESTAT MUMBAI has held that since the company therein has recruited the employees having vast experience in research, therefore credit is admissible - refund allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim of accumulated Cenvat credit for input service under Rule 5 of Cenvat Credit Rules, 2004 for output services exported; Determination of export of service for Scientific & Technical Consultancy Services; Rejection of refund claim amount by Adjudicating Authority; Appeal filed before Commissioner challenging the rejection; Interpretation of Place of Provision of Service Rules; Nexus between input services and output services for refund claims; Rejection of refund amount for garden maintenance and recruitment services.

Analysis:
The Appellant filed a refund claim of accumulated Cenvat credit for input services related to output services exported, amounting to ?5,22,74,046/- for the period April to June 2016. The Adjudicating Authority reduced the refund claim by ?13,27,192/- and rejected ?4,844/- due to alleged ineligible credit. The Commissioner upheld the rejection in the appeal filed by the Appellant.

The dispute centered around whether the Scientific & Technical Consultancy Services provided by the Appellant constituted export of service. The Revenue argued that as per Rule 4 of the Place of Provision of Service Rules, since the services were performed in India, they could not be considered as exported services. However, the Appellant contended that the services fell under Rule 3 of the Rules, which would classify them as export of service. The Appellant also highlighted that similar services provided in previous years were treated as export of services by the department.

The Tribunal analyzed the provisions of Rule 4 of the Place of Provision Service Rules, 2012 and concluded that the research and development activities performed by the Appellant did not fall under Rule 4, as the goods were not physically made available by the recipient of service. Instead, the Tribunal determined that the services qualified under Rule 3, considering the location of the service recipient outside India, thus constituting an export of service. The Tribunal cited previous decisions supporting this interpretation.

Regarding the rejection of certain refund amounts, the Tribunal disagreed with the Adjudicating Authority's decision. It allowed the refund claim related to garden maintenance services, citing a precedent where garden services were considered as input services. Similarly, the Tribunal allowed the refund claim for recruitment services, emphasizing the importance of experienced research personnel in such services.

Ultimately, the Tribunal allowed the appeal filed by the Appellant, granting consequential relief. The decision was pronounced in open court on 06.09.2019.