2013 (3) TMI 203 - AT - Service Tax

Refund claim on Cenvat credit of service tax denied - as per revenue input services have been received by the appellants after the period of export of services - Held that - This is a fact on record that these input services were received after the period of export not challenged by the appellants. Thus as decided in Shell India Markets Pvt. Ltd. vs. CCE, Bangalore(2012 (10) TMI 34 - KARNATAKA HIGH COURT) it is necessary to verify not only that particular input service is consumed for providing particular output service but also that eligible service received under various invoices have actually gone into consumption for providing impugned exported output service and not utilized for other purposes - refund has rightly been rejected in this case - against assessee. Refund of Cenvat credit of input services pertaining to Meal Vouchers denied - as per revenue these activities were undertaken by the appellant for welfare of the employees and not used for providing output service - Held that - Cenvat Credit of service tax paid on the outdoor canteen services is available to the appellant if the employees have not borne the service tax amount and the appellant has not charged the employees for providing the service as held in the case of Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT). Since the appellants are entitled for Cenvat credit of service tax on these services, they will also be eligible for refund of the same under Rule 5 if the services pertain to the period of refund in question - in favour of assessee.

Summary

Issues:
Refund of unutilized credit of service tax on input services for export of services under Rule 3 of Exports of Service Rules 2005.
Denial of refund claim by adjudicating authority based on the timing of input services received.
Refund denial for input services related to distribution of Sodexo Meal Passes.
Interpretation of Rule 5 of the Cenvat Credit Rules for refund eligibility.
Applicability of Cenvat credit for Meal Vouchers related input services.
Entitlement to refund for Cenvat Credit on outdoor canteen services.
Appellate Tribunal's decision on the appeals filed by M/s. BNY Mellon International Operations (India) Pvt. Ltd.

Analysis:
The case involved three appeals by M/s. BNY Mellon International Operations (India) Pvt. Ltd. against the Order-in-Appeal denying refund claims for unutilized credit of service tax on input services used for export of services. The adjudicating authority rejected parts of the refund claims based on the timing of input services received after the export period. The Commissioner (Appeals) upheld the rejection, leading to the appeals before the Tribunal.

The appellant's advocate argued that the input services' eligibility was not in dispute, and the denial was based on the timing of service receipt post-export. He contended that services like distribution of Sodexo Meal Passes, though welfare measures, were integral to the output services and eligible for refund under Rule 5 of the Cenvat Credit Rules.

The Revenue's representative supported the lower authorities' findings, emphasizing the timing of service receipt post-export as grounds for denial. The Tribunal consolidated the appeals due to identical issues and examined the facts.

The Tribunal noted that the refund denial was justified as the input services were received post-export, citing a Karnataka High Court judgment emphasizing the need for services to be consumed solely for the exported output service. Refund denial for Meal Vouchers was based on the welfare nature of the activities, but the Tribunal referenced a Bombay High Court case to assert eligibility for Cenvat credit and subsequent refund if services were not charged to employees.

Ultimately, the Tribunal partly allowed and partly rejected two appeals while rejecting one, based on the eligibility criteria under Rule 5 of the Cenvat Credit Rules and the specific nature of input services like Meal Vouchers and outdoor canteen services. The decision provided clarity on the refund claims and upheld the lower authorities' findings in line with relevant legal precedents.