2014 (6) TMI 390 - AT - Service Tax

Refund, under Rule 5 of the Cenvat Credit Rules, 2004 - Rejection of the claim of refund to the extent of Rs. 1,24,27,580/- on the ground that no nexus was established between the input services and the output service - absence of registration - Held that - Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsels appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the lower authorities cannot be sustained - Decided against Revenue. Demand of service tax - air ticket booking and professional charges - Held that - air tickets were used by employees of the company in connection with the business of the company. Similarly, it is submitted that the professional charges were paid to Chartered Accountants in connection with the business of the company. Neither of the submissions is supported by any documentary evidence. The learned counsel for the assessee submits that, given an opportunity, the requisite evidence can be adduced before the original authority - Accordingly, the decision taken by the lower appellate authority in relation to these services is set aside and the question of nexus is directed to be re-examined by the original authority after giving the assessee a reasonable opportunity of adducing evidence and of being personally heard - Decided in favour of assessee.

Summary

Issues:
1. Refund claim under Rule 5 of Cenvat Credit Rules, 2004.
2. Nexus between input services and output service.
3. Denial of refund for certain input services.
4. Challenge against denial of refund due to absence of registration.
5. Decision on air ticket booking and professional charges.

Refund Claim under Rule 5 of Cenvat Credit Rules, 2004:
The assessee claimed a refund of unutilized Cenvat credit on input services related to the export of output service. The original authority rejected a portion of the refund claim, but the appellate authority found a nexus between certain input services and the output service. The Revenue appealed against the appellate authority's decision, arguing that the authority lacked the power of remand. The Tribunal held that the appellate authority's action was not a remand, dismissing the Revenue's challenge and upholding the appellate authority's decision.

Nexus between Input Services and Output Service:
The appellate authority found a nexus between certain input services like security services, recruitment services, and others with the output service, directing a re-quantification of the refund amount. The Tribunal found no valid point in the Revenue's appeal, as the appellate authority had addressed the nexus issue and sent the case for re-quantification based on the Board's circular. The Revenue's appeal was dismissed.

Denial of Refund for Certain Input Services:
Regarding input services like air ticket booking and professional charges, the appellate authority held that these were not essential for the output service, upholding the original authority's decision. The assessee challenged this decision, also contesting the denial of refund for the period before registration with the department. The Tribunal referred to a High Court judgment and held that denial of refund solely based on absence of registration was not valid.

Decision on Air Ticket Booking and Professional Charges:
The Tribunal noted that the assessee contested the denial of refund for air ticket booking and professional charges, claiming these were used for business purposes. However, the submissions lacked documentary evidence. The Tribunal granted the assessee an opportunity to provide evidence before the original authority for a re-examination of the nexus issue. The decision on these services was set aside for further review based on evidence.

This judgment addressed various issues related to refund claims under the Cenvat Credit Rules, establishing a nexus between input and output services, challenging denials based on absence of registration, and providing opportunities for evidence submission for certain input services.