2024 (12) TMI 1302 - AT - Service Tax

Cash Refund of accumulated cenvat credit on account of services exported in terms of Rule 5 of Cenvat Credit Rules (CCR), 2004 read with N/N. 5/2006-CE-NT dated 14.3.2006 - HELD THAT - There is no dispute about the export of services by the appellant during the said quarter resulting into accumulation of cenvat credit. Assuming that even if the services are of non-taxable service, the issue is covered by the judgment of the Hon ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX 2011 (9) TMI 450 - KARNATAKA HIGH COURT which has been consistently followed by the Tribunal in a series of cases. Recently, this Tribunal in the case of M/S. CJK KNOWLEDGEWORKS GLOBAL INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BANGALORE 2024 (11) TMI 55 - CESTAT BANGALORE observed that ' The assessee is a 100% export oriented unit. The export of software at the relevant point of time was not a taxable service. However, the assessee had paid input tax on various services. According to the assessee a sum of Rs. 4,36,985/- is accumulated Cenvat credit. The Tribunal has categorically held that even though the export of software is not a taxable service but still the assessee cannot be denied the Cenvat credit. The assessee is entitled to the refund of Cenvat credit.' Conclusion - The refund claim cannot be denied. The fact remains is that the services which is exported were Information Technology Enabled Service . The cash refund of accumulated cenvat credit under Rule 5 of CCR, 2004 allowed. The impugned order set aside - appeal allowed.

Summary

Issues:
Entitlement to cash refund of accumulated credit for exported services under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The appeal was filed against the Order-in-Appeal rejecting the refund claims for accumulated cenvat credit on exported services. The appellant claimed the services were 'Information Technology Enabled Service' and not 'Information Technology Software Service' as alleged by the Revenue. The key issue was whether the appellants were entitled to the cash refund under Rule 5 of CCR, 2004. The appellant argued that the services exported were eligible for the refund based on the judgment of the Hon'ble High Court in a specific case. The Revenue, however, supported the findings of the lower authorities.

The Tribunal found that the dispute revolved around the export of services by the appellant, resulting in the accumulation of cenvat credit. Even if the services were non-taxable, the issue was covered by a judgment of the Hon'ble Karnataka High Court. The Tribunal referred to a case involving an EOU unit providing various services to overseas clients and availing CENVAT credit on input services. The lower authorities rejected the refund claims based on the services being considered exempted under a specific notification. However, the appellant argued that the services were mistakenly classified and should be eligible for the refund under Rule 5 of CCR, 2004, citing the Karnataka High Court judgment. The Tribunal noted that the department had previously allowed refund claims for different periods, indicating inconsistency in their approach.

The Tribunal referenced several judgments, including those from the Hon'ble High Court of Karnataka and its own decisions, to support the appellant's claim for the refund. The Tribunal highlighted that the Notification under Rule 5 of CCR, 2004 did not impose conditions based on the taxability of the exported services. Relying on the established legal principles and precedents, the Tribunal set aside the impugned order and allowed the appeal with consequential relief as per law.

This detailed analysis of the judgment showcases the legal arguments presented, the interpretation of relevant laws and notifications, and the application of judicial precedents to determine the entitlement to a cash refund of accumulated credit for exported services under Rule 5 of Cenvat Credit Rules, 2004.