2021 (3) TMI 421 - AT - Service Tax

Rejection of refund claim - export of services - renting of immovable property services - general insurance service - Manner of calculation of refund as per Rule 5 of the Credit Rules - Entitlement of interest under Section 11BB of the Central Excise Act on delayed refund amount - Rule 5 of the CENVAT Credit Rules. Renting of immovable property services - General insurance service - HELD THAT - On further perusal of the lease agreement, it is noted that the appellant had their registered office at Plot No. Y-14 for which reason the same has been mentioned in the invoice - The certificate issued by the landlord clearly mentions that they have rendered renting of immovable property services to the appellant in respect of rented premises i.e. South City Pinnacle situated at Plot No. X1-1. In view of the said factual matrix, there is no reason to dispute the receipt of services by the appellant in the absence of any contrary finding. The objection raised by the Department that office at Plot No. Y-14 has also been shared with the other company is not supported by any evidence and hence cannot be accepted merely on presumption basis. On the same count, there is no reason to deny credit on general insurance services availed by the appellant at their office premises i.e. South City Pinnacle - Credit allowed. Manner of calculation of refund as per Rule 5 of the Credit Rules - HELD THAT - As per the formula prescribed in Rule 5 of the Credit Rules, refund amount need to be ascertained by applying the ratio of value of export turnover to the total turnover on the net CENVAT Credit amount . The said net CENVT credit amount is the total of credit availed on inputs and inputs services as reduced by the amount in terms of Rule 3(5C). The said Rule 3(5C) is the amount to be paid by the manufacturer of excisable goods for corresponding inputs used for manufacture of goods on which duty has been remitted under Rule 21 of the Central Excise Rules. The said Rule 3(5C) has no relevance in the given case of assessee who is a service provider and not the manufacturer - there cannot be any question of making any deduction of the amount of credit utilised for payment of output service tax on domestic services in order to arrive at net CENVAT credit since not prescribed in the Rules - Department made a fundamental error in so far as computation of refundable amount is concerned - decided in favor of appellant. Entitlement of interest under Section 11BB of the Central Excise Act (as also made applicable to Service Tax) on delayed refund amount - HELD THAT - The law is amply clear that when there has been a delay in payment of refund amount, the assessee is entitled for interest under Section 11BB - the original authority has not dealt with the entitlement of interest. Further, in appeal also, the learned Commissioner has not given any finding despite that the appellant assessee has taken the same in their grounds of appeal. Since there has been a delay in sanctioning refund, the appellant s entitlement to interest is upheld. Matter remanded to quantify and grant refund - appeal allowed by way of remand.

Summary

Issues:
Admissibility of credit on 'renting of immovable property services' and 'general insurance service' for refund, computation of refund under Rule 5 of the Credit Rules, entitlement of interest under Section 11BB of the Central Excise Act.

Analysis:
1. Admissibility of Credit on Renting of Immovable Property Services:
The appellant claimed credit for renting services on premises occupied solely by them, not shared with another company as alleged by the Department. The lease agreement and certificate from the landlord supported the appellant's contention. The Tribunal found no reason to dispute the receipt of services by the appellant and allowed the credit on both renting services and general insurance services.

2. Computation of Refund under Rule 5 of the Credit Rules:
The Tribunal noted that the authorities made a computation error by deducting the amount utilized for payment of output service tax on domestic services while calculating the refundable amount. Rule 5 of the Credit Rules does not prescribe such deduction for service providers. The Department erred in computing the refundable amount, and the Tribunal allowed the appellant's claim in this regard.

3. Entitlement of Interest under Section 11BB of the Central Excise Act:
The Tribunal clarified that delay in refund payment entitles the assessee to interest under Section 11BB. Citing relevant legal provisions and precedents, the Tribunal emphasized that interest is payable in case of delayed refund under Rule 5 of the Credit Rules. The Tribunal upheld the appellant's entitlement to interest and remanded the matter to quantify the refund and applicable interest.

In conclusion, the Tribunal allowed the appeal by remanding the matter to the original authority for quantifying and granting the refund on the issues of credit admissibility and computation, along with interest entitlement. The judgment highlighted the importance of following legal provisions and precedents in determining refund claims and interest entitlement under the Central Excise Act.