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2023 (5) TMI 864 - AT - Service TaxRefund claim - denied on the ground that Cenvat credit against certain services was not admissible - invocation of Rule 5 of the Cenvat Credit Rules (correct or not) - HELD THAT - The exercise taken by the lower authorities for denying the credit was to be initiated as per Rule 14 of the Cenvat Credit Rules and that could not have been taken in a proceedings under Rule 5. This view has been held contrary by the Tribunal as referred to the order of the Tribunal in the case of M/S. CROSS TAB MARKETING SERVICES P. LTD. VERSUS C.C.G.S.T., MUMBAI EAST 2021 (9) TMI 979 - CESTAT MUMBAI where it was held that Since the Commissioner (Appeals) has by the impugned order held the refund to be admissible, to the extent of CENVAT Credit held admissible by him subject to verification of the documents by the original authority I modify his order to this extent i.e. that entire credit as claimed by the Appellant for determining the refund amount is held admissible if not held admissible in proper proceedings initiated under Rule 14 of the CENVAT Credit Rules, 2004. Similar view has been taken by the Tribunal in the case of M/S BNP PARIBAS INDIA SOLUTION PVT LTD VERSUS COMMISSIONER OF CGST, MUMBAI EAST 2021 (12) TMI 676 - CESTAT MUMBAI where it was held that Indisputably, in the refund proceedings under Rule 5 ibid as amended, any such attempt to deny or to vary the credit availed during the period under consideration is not permissible. If the quantum of the Cenvat credit is to be varied or to be denied on the ground that certain services do not qualify as input services or on the ground of no nexus , then the same could have been done only by taking recourse to Rule 14 ibid. In view of the above the impugned order cannot be sustained on merits - appeal allowed.
Issues Involved:
1. Denial of refund claim under Rule 5 of the Cenvat Credit Rules, 2004. 2. Requirement for initiating proceedings under Rule 14 for denial of Cenvat credit. 3. Admissibility of Cenvat credit for various services. Detailed Analysis: 1. Denial of Refund Claim under Rule 5 of the Cenvat Credit Rules, 2004: The appellant filed a refund claim amounting to Rs.4,69,94,522/- for the quarter April 2013 to June 2013. The original authority disallowed Cenvat credit of Rs.38,44,799/-. The Commissioner (Appeals) upheld this denial, leading to the present appeal. The appellant argued that denial of Cenvat credit cannot be done under Rule 5 of the Cenvat Credit Rules, 2004, and if Cenvat credit was to be denied, it should have been done after initiating proceedings under Rule 14 of the Cenvat Credit Rules, 2004. 2. Requirement for Initiating Proceedings under Rule 14 for Denial of Cenvat Credit: The Tribunal emphasized that the exercise of denying credit should have been initiated under Rule 14 of the Cenvat Credit Rules, 2004, rather than in proceedings under Rule 5. This view is supported by various decisions, including BNP Paribas India Solution Pvt. Ltd. [2022 (58) GSTL 539 (Tri.-Mumbai)], JFE Steel India Pvt. Ltd. [2021 (44) GSTL 292 (Tri.-Chan.)], and others. The Tribunal noted that Rule 5, as amended by Notification No 18/2012 -CX (NT) dated 07.03.2012, does not require establishing a nexus between input services and exported services for refund claims. The admissible refund is proportional to the ratio of export turnover to total turnover during the relevant period. 3. Admissibility of Cenvat Credit for Various Services: The lower authorities allowed credit for some services and disallowed it for others without initiating proceedings under Rule 14. The services for which credit was allowed and disallowed are as follows: - Credit Denied: Event Management Services & Mandap Keeper Services, Short Term Accommodation Services, Supply of Tangible Goods Services, Cleaning Services, Courier Services, Storage and Warehousing Services, Management, Maintenance & Repair Service, Broadcasting Services, Business Auxiliary Services, Renting of Immovable Property Services, Business Support Services, Missing Invoices, Invoices not having registration number, Dummy Invoices, Time-barred Invoices. - Credit Allowed: Advertising Services, Interior Decorating Services, Customs House Agents Services, Goods Transport Agency's Services, Manpower Recruitment or supply agency service, Legal Consultancy Services, Chartered Accountant Services, Management Consultancy Services, Commercial Training Services, Security Services. The Tribunal held that the Commissioner (Appeals) misdirected by adjudging the refund claim under Rule 5 instead of initiating proceedings under Rule 14 for varying the quantum of Cenvat credit. The Tribunal cited the case of Cross Tab Marketing Services Pvt. Ltd. [2021 (55) GSTL 29 (Tri.-Mumbai)], where it was held that any attempt to deny or vary credit availed during the period under consideration is not permissible under Rule 5 proceedings. Conclusion: The Tribunal concluded that the impugned order could not be sustained on merits. The appeal was allowed, and it was held that the entire credit claimed by the appellant for determining the refund amount is admissible unless held inadmissible in proper proceedings initiated under Rule 14 of the Cenvat Credit Rules, 2004. The order was pronounced in the open court.
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