2023 (11) TMI 476 - AT - Service Tax

Refund of unutilised credit accrued from export of services - Reverse charge mechanism - HELD THAT - In the point of refusal of refund without initiation of preceding under Rule 14 of CENVAT Credit Rules, 2004, such a proceeding is a pre-requisite for denial of credit and it is preferred to reproduce the logic cited in the case of M/S. KEVA FRAGRANCES PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III 2022 (3) TMI 271 - CESTAT MUMBAI , to substantiate the views taken by CESTAT, where it was held that Without denying the CENVAT Credit taken/ availed by the appellant in their book of accounts during the relevant period (quarter) by way of initiating proceedings against the appellant in terms of Rule 14, revenue could not have altered the quantum of Net CENVAT Credit availed during the said quarter, and deny the encashment of that amount of the CENVAT Credit which is due as per the Rule 5. It is now well settled principle of law that where a statute provides for a thing to be done in a particular manner, then it has to be done in that manner, and in no other manner. There are no hesitation to hold that credit as sought by the Appellant is admissible to it except for an amount of Rs.23,418/- and Rs.38,604/- in respect of which invoices were not submitted and/or Service Tax numbers were not available on the bills, in which respect also Appellant has abandoned its claim in writing through a memo filed before this Tribunal. The order passed by the Commissioner of Service Tax (Appeals)-I, Mumbai to the extent of denial of CENVAT Credit except amounts of Rs.23,418/- and Rs.38,604/-, are hereby set aside - Appeal allowed.

Summary

Issues involved:
Denial of CENVAT credit totaling Rs.1,22,29,342 to the Appellant for the period from April, 2012 to March, 2016 through four Orders-in-Original confirmed by the Commissioner (Appeals) in 2017 and 2020 for the disadvantage of the Appellant who claimed refund of unutilized credit accrued from export of services.

Facts of the case:
The Appellant, an exporter of Information Technology Software Services, accumulated CENVAT Credit on Service Tax liability discharged under reverse charge mechanism and normal procedure for services availed within India. Refund applications for various periods were rejected on grounds including lack of nexus between input and output services, unavailability of Service Tax numbers on bills, and invoices not matching the registered address.

Appellant's arguments:
The Appellant's Counsel cited previous Tribunal decisions and CBEC circulars to support the claim that no one-to-one correlation is required between input and output services for claiming refund. They argued that denial of credit without initiation of proceedings under Rule 14 of CENVAT Credit Rules is not in conformity with the law.

Respondent's arguments:
The Respondent's Counsel supported the reasoning of the Commissioner (Appeals) and highlighted issues such as credit availed for unregistered premises. They argued that certain conditions, including the service provider's name and address, are mandatory for availing CENVAT Credit.

Judgment:
The Tribunal referred to previous decisions and held that the Appellant is entitled to the credit sought, except for specific amounts where invoices were not submitted or Service Tax numbers were unavailable. The orders denying CENVAT Credit were set aside, with consequential relief, except for the amounts of Rs.23,418 and Rs.38,604.

Conclusion:
The appeals were allowed, and the orders denying CENVAT Credit were set aside, with the Tribunal upholding the admissibility of the credit claimed by the Appellant, except for specific amounts where documentation issues were identified.