2023 (5) TMI 655 - AT - Service Tax

Refund of CENVAT Credit - input services used in legal consultancy services provided by the appellant to clients situated outside India (export of services) - denial of refund on the ground that the services so rendered by them are not taxable at their end irrespective of the fact whether the same are provided domestically or are exported - HELD THAT - The issue involved in this appeal is covered by a judgment of the Delhi High Court in the appellant s own case COMMISSIONER OF CGST DELHI EAST VERSUS ANAND AND ANAND 2022 (8) TMI 761 - DELHI HIGH COURT where it was held that It is because the expression output service finds a mention in Sub-rule(1) of Rule S, that the revenue chose to refer to Rule 2(p) of the 2004 Rules and, in our view, consequently, mixed up the domestic service provided by the service provider i.e., the assessee, with the export service. In view of the aforesaid decision of the Delhi High Court, it has to be held that the appellant was entitled for refund of the claims made under rule 5 of the 2004 Rules. The order dated December 22, 2017 passed by the Commissioner (Appeals-I) is, therefore, set aside and the appeal is allowed.

Summary

Issues involved:
The issues involved in this judgment include challenging the rejection of refund claims under rule 5 of the CENVAT Credit Rules, 2004 for the period from April 2015 to December 2015, related to input services used in legal consultancy services provided to clients outside India.

Details of the Judgment:

1. The appeal was filed by a Law firm to challenge the order passed by the Commissioner upholding the rejection of refund claims under rule 5 of the 2004 Rules for input services used in legal consultancy services provided to clients outside India.

2. The Assistant Commissioner rejected the refund claims based on the recipient being liable for service tax payment and the services provided not being covered under "Output Services" as per Rule 2(p) of the 2004 Rules.

3. The Commissioner (Appeals) upheld the Assistant Commissioner's decision, stating that the appellant was not providing taxable output services and, therefore, not eligible for CENVAT credit or refund under the CENVAT Credit Rules.

4. The appellant argued that a judgment of the Delhi High Court in a similar case supported their claim for refund, while the Department's representative opposed interference with the impugned order.

5. The Delhi High Court judgment highlighted that the exclusionary provision of Rule 2(p) does not apply when service tax is not paid by the recipient of the exported service, making the appellant eligible for refund under Rule 5 of the 2004 Rules.

6. Consequently, the Delhi High Court's decision favored the appellant, entitling them to a refund under rule 5 of the 2004 Rules.

7. As a result, the Commissioner's order was set aside, and the appeal was allowed, granting the appellant the refund with consequential benefits.