2020 (12) TMI 699 - AT - Service Tax

Refund of accumulated credit - Export of services - debit entry was reflected in the ST-3 return of subsequent period and not for the period in question - allegation that the condition 2(h) of the Notification does not stand satisfied - HELD THAT - The appellant had taken a categorical stand that the debit was made on 05.03.2014, i.e. prior to filing of the refund claim. The Revenue is not disputing the said debit entry but is adopting a hyper technical view that such debit entry was reflected in the ST-3 return of subsequent period and not for the period in question. The entire idea of debit of cenvat credit before filing of refund claim is that an assessee does not avail the dual benefit of credit as also refund of the same. It is primarily for this reason that the relevant rule read with notification in question requires debit before filing of refund claim so as to avoid double benefit to the claimant - This was also observed by the Tribunal the case of M/s. Kellogg and Andelson Management Service Pvt Ltd. Vs. CST, Chennai II 2018 (8) TMI 1680 - CESTAT CHENNAI . There is no dispute about the fact that services in question were exported and appellant is otherwise entitled to the refund of accumulated credit in terms of Rule 5 of the Cenvat Credit Rules read with Notification in question - Inasmuch the books of accounts stand already debited by the appellant on 05.03.2014, before filing of refund claim on 20.03.2014, there are no justifiable reason to deny the refund claim on the said hyper-technical ground. Revenue is directed to refund the admissible amount of credit to the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim denial based on delay in debiting Cenvat credit from account as per Notification No. 27/2012-CE(NT) dated 18.06.2012.

Analysis:
The appellant, registered for taxable services under 'Information Technology Software Services,' availed cenvat credit and sought a refund upon exporting services. The dispute arose when the Revenue contended that the appellant did not satisfy condition 2(h) of Notification No. 27/2012-CE(NT) due to a delay in reflecting the credit reversal in the relevant ST-3 return. Proceedings initiated through a show cause notice led to an order denying the refund claim, upheld by the Commissioner (Appeals), prompting the present appeal.

The Commissioner (Appeals) emphasized the requirement to debit the claimed amount from the Cenvat account at the time of making the claim, as per the Notification conditions. The appellant's reversal of the amount was reflected in the ST-3 return for a subsequent period, not the relevant period, leading to a delay of over a year. Despite the appellant's argument that the debit was made before filing the refund claim, the Revenue took a hyper-technical stance, emphasizing the timely debit to prevent dual benefits. The Commissioner held that the appellant's non-compliance with the Notification provisions rendered the refund disallowable.

In contrast, the Tribunal noted that the appellant had debited the account before filing the refund claim, citing precedents where subsequent debits were considered compliant. Referring to relevant case laws, the Tribunal emphasized that procedural lapses should not bar a refund claim, especially when services were exported, and the appellant was entitled to the refund under the Cenvat Credit Rules. The Tribunal overturned the impugned order, directing the Revenue to refund the admissible credit amount to the appellant.

In conclusion, the Tribunal set aside the denial of the refund claim, emphasizing the appellant's timely debit entry before filing the claim and rejecting the hyper-technical approach adopted by the Revenue. The judgment highlighted the importance of avoiding double benefits while ensuring that procedural grounds do not unjustly deny legitimate refund claims.