2014 (4) TMI 325 - AT - Service Tax

Waiver of pre-deposit of service tax - Information Technology Software Service and Consulting Engineers Service - Held that - admitted facts are that the applicants filed refund claim on 24.04.2012 in respect of the credit availed on the input services received during the period 16.5.2008 to 31.3.2010. As the applicants are claiming refund of the service tax paid on the input services which are used for the output services which were exported therefore the onus is on the applicants to show that the service tax paid on the services in respect of which refund claim is being filed are used for the export of output service. In the present case the applicants failed to show that the services which received in 2008-2010 were used in the output services which are exported in 2011-12. As per the provisions of Notification No. 5/2006-CE (NT) where the procedure has been prescribed in filing refund under Section 5 of the Cenvat Credit Rules 2004 it has been specifically provided that refund is to be filed before the expiry of the period specified under Section 11B of the Central Excise Act. In view of the above the applicants failed to show that input services regarding which refund claim is filed are used in providing the output service as the refund claim is in respect of the services which were received during the period 2008-2010 and the output service was exported in 2011-2012 prima facie the applicants have failed to make out a case for total waiver of the pre-deposit - Conditional stay granted.

Summary

Issues:
1. Whether the applicant is entitled to a waiver of pre-deposit of service tax and interest?
2. Whether the refund claim made by the applicant is valid under Rule 5 of the Cenvat Credit Rules, 2004?
3. Whether the services received by the applicant during 2008-2010 were used for output services exported in 2011-2012?
4. Whether the applicant demonstrated financial hardship?

Analysis:

Issue 1:
The applicant sought a waiver of pre-deposit of service tax and interest amounting to Rs. 2,92,64,976. The demand arose due to an erroneous refund claim. The Commissioner (Appeals) directed the applicant to pay the said amount along with interest. The applicant contended that the refund claim was filed within one year from the export of services and relied on relevant circulars and case laws. However, the Revenue relied on statutory provisions and previous judgments to oppose the waiver. The Tribunal found that the applicant failed to demonstrate financial hardship and directed a partial deposit of Rs. One crore within eight weeks, with the remaining dues waived pending appeal.

Issue 2:
The applicant claimed a refund under Rule 5 of the Cenvat Credit Rules, 2004, for service tax paid on input services used in providing export output services. The Revenue challenged the claim, arguing that the applicant did not prove the linkage between the services received during 2008-2010 and the output services exported in 2011-2012. The Tribunal emphasized the need to establish the utilization of input services for exported output services. The Tribunal referenced a specific case law and notification to support its decision to not grant a total waiver of pre-deposit.

Issue 3:
The crucial issue revolved around whether the services received by the applicant during 2008-2010 were indeed utilized for the output services exported in 2011-2012. The Tribunal highlighted the applicant's failure to establish this linkage, as required by law. Citing a relevant judgment, the Tribunal emphasized the necessity of verifying the actual consumption of input services for providing the exported output services. The Tribunal found that the applicant did not meet this burden of proof, leading to the denial of a total waiver of pre-deposit.

Issue 4:
Despite the applicant's reliance on circulars and case laws, the Tribunal's decision centered on the lack of evidence showing the utilization of input services for the exported output services. The Tribunal considered statutory provisions and previous judgments, ultimately requiring a partial deposit by the applicant. The Tribunal's decision highlighted the importance of substantiating the connection between input services and exported output services to support a refund claim effectively.

In conclusion, the Tribunal's judgment focused on the applicant's failure to establish the essential link between the input services received and the output services exported, leading to the denial of a total waiver of pre-deposit. The decision underscored the significance of providing concrete evidence to support refund claims in compliance with statutory regulations and legal precedents.