2010 (7) TMI 165 - AT - Service Tax

Refund of Credit- The adjudicating authority rejected the refund claim on the ground that the appellants obtained registration under the category of Business Auxiliary Service on 28-12-2007. Since the appellants were not registered with the service-tax department prior to. 2842-2007 the input service tax credit is not available prior to that date and hence, question of utilization of the same does not arise. Thus the appellant were not eligible for refund of input service credit for the period from April 07 to September 07. Appellant contending that refund allowed for earlier period. Held that- matter examined in de novo proceedings and refund allowed before and not known whether such order accepted by department or not. impugned order set aside. Matter remanded to adjudicating authority.

Summary

Issues:
Refund of input service tax credit for the period before registration under 'Business Auxiliary Services'.

Analysis:
The appellants, engaged in various services falling under 'Business Auxiliary Services', applied for a refund of service tax paid on input services used for output services exported from July 2007 to September 2007. The refund claim was rejected by the adjudicating authority citing that the appellants were not registered with the service-tax department before a specific date, thus making them ineligible for the refund for the period in question.

The appellant's appeal before the Commissioner (Appeals) was also dismissed on the grounds that the credit accumulated before obtaining registration could not be considered as input for refund purposes. The advocate highlighted the absence of a registration requirement for claiming accumulated cenvat credit refund under Rule 5, substituting the said rule. Additionally, it was argued that the appellant, being a 100% EOU, was already registered with the central excise department, and the service tax department registration was merely to comply with circular conditions.

The Deputy Commissioner, in de novo proceedings, reviewed the refund claim for the period before registration and ruled in favor of the assessee, granting the refund. The learned DR referred to a Tribunal's stay order in a different case, emphasizing that a prima facie case for claiming refund of credit for services received before registration was not established, directing a partial deposit.

The Member (J) noted that the Tribunal's decision in the referred case was provisional as it was part of a stay petition, and not a definitive ruling. Contrarily, the Deputy Commissioner's detailed examination during de novo proceedings favored the refund claim. The final acceptance status of the Deputy Commissioner's order by the Revenue was not on record, leading to the decision to set aside the previous orders and remand the matter to the original adjudicating authority for a fresh decision, considering all relevant factors and the earlier order.

In conclusion, the appeals were allowed for remand, emphasizing the need for a comprehensive reevaluation by the adjudicating authority based on all available information and previous decisions.

*(Pronounced in Court on 6-7-2010)*