2020 (9) TMI 259 - AT - Service Tax

Refund of the accumulated Cenvat credit - Place of provision of service - intermediary service - rejection of refund on the ground that the services provided by the Appellant are not to be considered as export of service as the services were executed in India - Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012-C.E. (N.T.), dated 18th June 2012 - period from October 2014 to September 2015. Whether the services provided by the appellant qualify as export of services or intermediary services ? - HELD THAT - CBEC vide Guidance Note dated 20th June 2012, had few conditions which are to be satisfied for a service to be designated as export of service - In the present case, the service provided by the Appellant satisfies all the above mentioned conditions and hence, is an export of service. The Appellant is situated in taxable territory, the recipient of service is located outside India, the service provided by the Appellant does not fall under the negative list, the place of provision of service as per Rule 3 of the POPS Rules, 2012 is outside India, the payment has been received by the Appellant in convertible foreign exchange and the Appellant and the service recipient are separate legal entities. However, for removal of doubt, it is pertinent that the service provided by the Appellant must at the same time also not qualify as intermediary service. Thus, the service provided by the Appellant has been provided on its own account and therefore, does not qualify as intermediary service. Input service having no nexus with output service - HELD THAT - The services were availed for right to use certain footage in the film, which were brought from an online vendor database and to enable the Appellant to undertake production work. Therefore, such services were in relation to the output service provided by the Appellant and therefore, are input services as per the Cenvat Credit Rules, 2004. Credit availed on the basis of three invoices amounting to ₹ 60,578/- which were not issued in favour of the Appellant - HELD THAT - As such invoices were not issued in favour of the Appellant, it is not open to the Appellant to avail credit on the basis of such invoices. Therefore, the credit availed to the extent of ₹ 60,578/- is liable to be denied. Appeal allowed in part.

Summary

Issues:
Refund of accumulated Cenvat credit, classification of services as 'export of service' or 'intermediary services', rejection of refund claim by adjudicating authority, appeal before First Appellate Authority, consideration of documentary proof for refund claim, nexus of input services with output service, credit availed on invoices not issued in favor of the Appellant.

Refund of Accumulated Cenvat Credit:
The Appellant, engaged in providing 'Business Auxiliary Service', entered into an agreement with a UK company for various services. Seeking refund of accumulated Cenvat credit, the claim was rejected by the adjudicating authority on grounds including the services being executed in India and lack of nexus between input and output services. The Appellant appealed this decision, stating the services were provided on a principal-to-principal basis.

Classification of Services:
The main issue was determining whether the services provided by the Appellant qualified as 'export of services' or 'intermediary services'. The Tribunal analyzed conditions set by CBEC for export of service, concluding that the Appellant's services met all criteria for export. It was crucial to establish that the services were not intermediary services, as clarified by the Guidance Note and a previous Tribunal ruling.

Rejection of Refund Claim:
The adjudicating authority rejected the refund claim, citing reasons such as services not qualifying as export due to execution in India and lack of documentary proof. The First Appellate Authority upheld this decision. However, the Appellant argued that all relevant documents were submitted, challenging the observations made.

Nexus of Input Services:
Regarding services with no perceived nexus with the output service, the Tribunal found that these services were indeed related to the output service provided by the Appellant. This conclusion was based on the nature of the services availed and their direct connection to the production work undertaken by the Appellant.

Credit Availed on Invoices:
An issue arose concerning credit availed on invoices not issued in favor of the Appellant. The Tribunal ruled that credit based on such invoices could not be accepted, leading to a partial allowance of the appeal filed by the Appellant. The decision was pronounced on 28.07.2020, providing clarity on various aspects of the case.

This detailed analysis of the judgment highlights the key issues addressed, the arguments presented by the parties involved, and the Tribunal's findings and decisions on each aspect of the case.