2022 (1) TMI 970 - AT - Service Tax

Rejection of refund claim - input services utilized in export of support services of business or commerce - rejection on the ground of lack of nexus - absence of supporting invoice - failure to explain the relevance of works contract service in export activity - period from January 2017 to March 2017 - HELD THAT - As pointed out by the Learned Counsel, submission of invoice is not enumerated in the safeguards and procedures prescribed in the relevant notification. Furthermore, the absence of invoice corresponding to credit taken by an assessee should be proceeded against for denial of credit by the competent authority in proceedings under rule 14 of the CENVAT Credit Rules, 2004 and not to be adjudicated while disposing off claim of refund under rule 5 of the said Rules and, that too , without show cause notice to that effect. Works contract service - HELD THAT - The Tribunal has settled the dispute on eligibility in RED HAT INDIA (P.) LTD. VERSUS PRINCIPAL COMMISSIONER, SERVICE TAX, COMMISSIONERATE, PUNE 2016 (6) TMI 619 - CESTAT MUMBAI where it was held that it is clear that Works Contract Services are excluded only when it is used for construction service, whereas in the present case input services were used for maintenance of office equipment and building therefore, this particular works contract service does not fall under the exclusion category in the definition of input service, therefore works contract service in the present case is input service and eligible of refund under Rule 5. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to partial rejection of claim for refund under rule 5 of CENVAT Credit Rules, 2004.

Analysis:
The appellant, M/s Credit Suisse Business Analytics (India) Pvt Ltd, contested the partial rejection of their refund claim under rule 5 of CENVAT Credit Rules, 2004. The dispute arose from an order-in-appeal issued by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals), Raigad, dated 30th November 2018. The appellant sought a refund of tax amounting to &8377; 3,63,42,072 paid on 'input services' used in exporting 'support services of business or commerce' between January 2017 to March 2017. The original authority disallowed a portion of the claim on grounds of lack of 'nexus', absence of supporting invoice, and failure to justify the relevance of 'works contract service' in the export activity. On appeal, while some relief was granted, certain amounts were still denied due to various reasons.

The main focus of the present proceedings was on the rejection of the tax paid on 'works contract service' totaling &8377; 34,984/- and &8377; 43,271/-, which was disallowed for not providing relevant invoices. The appellant argued that the conditions in the relevant notification did not specifically mandate the submission of invoices. They contended that despite the statutory importance of invoices, the necessary documents were presented before the Tribunal. Additionally, reference was made to a previous decision of the Tribunal to support their case.

The Authorized Representative, on the other hand, supported the rejection of the claim, emphasizing that the reasons for disallowance were adequately explained by the authorities. The failure to furnish the required invoices and the inability to demonstrate eligibility for the refund on 'works contract service' were cited as justifications for upholding the impugned order.

Regarding the issue of invoices, it was highlighted that the notification did not explicitly list invoice submission as a mandatory requirement. The absence of an invoice corresponding to the credit claimed by an assessee should be addressed through denial of credit under rule 14 of the CENVAT Credit Rules, 2004, rather than in a refund claim under rule 5 without prior show cause notice.

In relation to the 'works contract service', the Tribunal had previously clarified the eligibility criteria in a different case, stating that such services are considered input services unless used for construction purposes. In the present matter, since the services were utilized for maintenance rather than construction, they were deemed eligible for refund under Rule 5. Consequently, the impugned order was set aside in part, and the appeal was allowed in favor of the appellant.