2021 (1) TMI 180 - AT - Service Tax

Refund of unutilized Cenvat Credit - refund rejected on the ground of nexus, formula prescribed under Rule 5 ibid as well as Notification No.27/2012-CE (NT) dated 18.6.2012 while calculating the amount of refund was not properly applied, on the ground that maximum amount of eligible refund cannot be greater than the unutilized Cenvat Credit for the quarter and also on the ground that the value of services are not paid to the vendor within the limitation period as prescribed u/r 4(7) ibid. HELD THAT - There is no discussion about the contentions raised by the appellants and in the impugned order there are no proper reasonings/ findings as to how the part of the refund claim was disallowed. From the impugned order it is not possible to know the reasoning for rejection of the part of refund claim. Learned Commissioner ought to have discussed the relevant facts and given reasonings while rejecting part of the refund amount claimed by the appellants but there are no such discussions in the impugned order. Matter remanded back to the learned Commissioner for deciding afresh limited to the issues raised in the instant Appeals because for the refund allowed by the learned commissioner no appeal was filed and it attained finality - appeal allowed by way of remand.

Issues:
Challenging denial of refund under Rule 5 of Cenvat Credit Rules, 2004; Nexus between input and output services; Application of formula for refund calculation; Maximum refund amount limitation; Payment of service value within prescribed period; Proper reasoning by the Commissioner; Consideration of evidence; Show cause notice issuance; Lack of findings by the Commissioner.

Analysis:
The Appeals were filed challenging the denial of refund under Rule 5 of Cenvat Credit Rules, 2004 by the Commissioner (Appeals-III), CST&CX, Mumbai. The Commissioner partially granted the refund but denied portions amounting to specific sums in each Appeal. The Appeals were filed by the Appellants contesting the denial of refund. Notably, the Revenue did not appeal against the partial grant of refund by the Commissioner.

The key issues revolved around the nexus between input and output services, the correct application of the refund calculation formula, the limitation on the maximum eligible refund amount, and the timely payment of service values. The Appellants argued that proper reasoning was lacking in the Commissioner's decision, with contentions that all necessary invoices were provided to establish the nexus, and amendments in the Cenvat Credit Rules prevented denial of refunds based on nexus. The Appellants also claimed that the turnover of the Mumbai office should have been considered in calculating the refund amount, along with the Cenvat credit related to the Mumbai office.

During the hearing, the Appellants' counsel emphasized the absence of proper reasoning in the Commissioner's decision and the failure to consider evidence presented. It was argued that the Commissioner did not provide adequate findings on the issues raised, including the absence of a show cause notice. The Authorised Representative for the Revenue supported the findings in the impugned order and sought the dismissal of the Appeals.

Upon review, the Member (Judicial) found merit in the Appellants' contentions. It was observed that the Commissioner's decision lacked detailed discussions on the contentions raised by the Appellants and did not provide clear reasoning for disallowing parts of the refund claim. As a result, the Member decided to remand the Appeals back to the Commissioner for a fresh decision limited to the issues raised in the Appeals. The matter was remanded to ensure proper reasoning and findings were recorded, and both sides were given a fair opportunity to present their case.

Ultimately, the Appeals were allowed by way of remand, emphasizing the need for a more thorough consideration of the issues raised in the Appeals to ensure a just decision. The decision to remand the matter back to the Commissioner was made without delving into the merits of the case, focusing solely on the procedural deficiencies in the earlier decision.

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