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2023 (3) TMI 446 - AT - Service TaxRefund of unutilised CENVAT Credit - exporter of services - rejection of refund on the ground that credit is not reflected in the ST-3 return - HELD THAT - From the perusal of the order of tribunal while remanding the matter it is evident that tribunal has held that the appellant is eligible to avail the Cenvat Credit of the input services for the period prior to 14.03.2006. It is not even the case of revenue that the CENVAT Credit is not available in respect of these services however said credit has not been reflected in the return filed by the appellant during the period 2005-06 or as opening balance in the ST-3 return filed for the period April to September 2006. It is evident that ST-3 return has not been mentioned as the document relevant for the purpose of considering the admissibility of the credit and the refund. Accordingly rejection of refund claim by referring to the ST-3 return, cannot be justified, provided the fact of the admissibility and availability of the credit claimed as refund can be determined from the records maintained under the Central Excise Rules, 2002, the CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994. Reliance placed in the case of PRINCIPAL COMMISSIONER OF SERVICE-TAX VERSUS BROADCOM INDIA RESEARCH PVT. LTD. 2016 (6) TMI 877 - KARNATAKA HIGH COURT where it was held that the relevant documents on the basis of which credit was taken, nature of service and its nexus and utilization of the service for there was some mistake in the ST-3 returns, substantive right of assessee for refund cannot be rejected. Thus, the refund claim could not have been denied for this reason. It is stated/ unstated policy which govern the exports of goods or services across the globe that the local taxes should not be exported along with the goods or services exported. Appeal allowed.
Issues Involved:
1. Eligibility for refund of unutilized Cenvat Credit. 2. Validity of denial of refund based on non-reflection of Cenvat Credit in ST-3 returns. 3. Relevance of documents other than ST-3 returns for claiming refund. 4. Nexus of input services with output services for Cenvat Credit eligibility. Issue-wise Detailed Analysis: 1. Eligibility for Refund of Unutilized Cenvat Credit: The appellant, a provider of "Banking and other financial services," filed refund claims for unutilized Cenvat Credit for the periods April 2005 to December 2005 and January 2006 to September 2006. The original authority rejected these claims, but the CESTAT, West Zonal Bench, Mumbai, remanded the matter, affirming the appellant's eligibility for Cenvat Credit for the period prior to 14.03.2006. The Tribunal emphasized that the appellant could not be denied the refund of unutilized Cenvat Credit, as it was eligible under the substituted Rule 5 of the Cenvat Credit Rules, 2004. 2. Validity of Denial of Refund Based on Non-reflection of Cenvat Credit in ST-3 Returns: The original authority denied the refund claim on the grounds that the appellant did not reflect any opening balance of Cenvat Credit or Education Cess in the ST-3 returns for April 2006, implying no unutilized credit was available. The Tribunal, however, noted that the denial of refund based on the non-reflection of Cenvat Credit in the ST-3 returns was unsustainable. It cited multiple precedents, including Broadcom Research Pvt. Ltd., Jagdamba Polymers Ltd., and Morning Star India Pvt Ltd., which held that the refund claim should not be rejected merely because the Cenvat Credit was not shown in the ST-3 returns. 3. Relevance of Documents Other Than ST-3 Returns for Claiming Refund: The Tribunal highlighted that ST-3 returns are not the sole documents for determining the admissibility of Cenvat Credit and refund claims. As per Notification No. 5/2006-CE (NT) dated 14.03.2006, relevant extracts of records maintained under the Central Excise Rules, 2002, the CENVAT Credit Rules, 2004, or the Service Tax Rules, 1994, could be used to evidence the taking of Cenvat Credit and its utilization. The Tribunal concluded that the rejection of the refund claim by referring solely to the ST-3 return was not justified, provided the admissibility and availability of the claimed credit could be determined from other maintained records. 4. Nexus of Input Services with Output Services for Cenvat Credit Eligibility: The original authority also disallowed Cenvat Credit on various input services, stating they had no nexus with the output services. However, the Tribunal did not delve deeply into this issue in the final judgment, focusing instead on the procedural aspects and the eligibility of the appellant for the refund based on the records maintained. The Tribunal underscored that the substantial benefit of the refund could not be denied if the genuineness of the transactions and the eligibility of Cenvat Credit could be verified through maintained records. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order to the extent it denied the refund of unutilized Cenvat Credit based on procedural grounds. It emphasized that local taxes should not be exported along with goods or services, aligning with the broader policy governing exports. The Tribunal's decision reinforced the principle that procedural lapses, such as non-reflection in ST-3 returns, should not override the substantive right to claim refunds for eligible Cenvat Credit. The appeal was allowed, and the order was pronounced in the open court on 08.03.2023.
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