2015 (12) TMI 954 - AT - Service Tax

Denial of refund claim - information technology service - Software Technology Parks of India (STPI) scheme - rejection on the ground that appellant should have utilised the credit cannot be accepted - Held that - Further the original authority had held that CENVAT credit of ₹ 35,445/- was not admissible and therefore not eligible for refund. There is no discussion about this in the order of the Commissioner (Appeals) and even in the appeal memorandum, no submissions have been made. On going through the table wherein eligibility has been considered, it is seen that in respect of three invoices credit has been disallowed on the ground that the invoices are in favour of Ness Technologies (India) Pvt. Ltd., Bangalore. There are several decisions taking a view that on the ground that the invoice is in the name of different person, credit cannot be denied. Rule 9(2) of CCR specifies the essential ingredients and also provides that if these are available, credit can be allowed by the concerned authority. While considering the refund claims afresh, the original authority may please consider this aspect. Two amounts of ₹ 809/- and ₹ 2971/- have been disallowed on the ground that the refund claim related to one month whereas invoices related to three months. - Decided in favour of Assessee.

Summary

Issues:
Refund claims of unutilized CENVAT credit for service tax paid on input services under Rule 5 of CENVAT Credit Rules 2004; Eligibility for refund when output service provider could not utilize input service credit accumulated on account of exports; Rejection of refund claims due to domestic clearances and payment of duty in cash instead of utilizing CENVAT credit; Appellants providing services in DTA and filing refund claims after realizing inability to utilize CENVAT credit post-exports; Appellants' reliance on Navbharat Industries case for refund eligibility; Disallowance of CENVAT credit and invoices in favor of different entities; Remand of matters to original adjudicating authority for reconsideration of refund claims.

Analysis:

The judgment by B.S.V. Murthy of the Appellate Tribunal CESTAT Bangalore addresses three appeals challenging a common order regarding refund claims of unutilized CENVAT credit for service tax paid on input services under Rule 5 of CENVAT Credit Rules 2004. The appellants, registered for taxable services under 'information technology service,' are 100% EOU under the STPI scheme. The adjudicating authority rejected the refund claims, stating that the appellants could have used the accumulated credit for domestic clearances instead of paying duty in cash. The appeals were also dismissed based on this reasoning.

The appellants, providing services in DTA and paying service tax in cash instead of utilizing CENVAT credit, filed refund claims post-exports when unable to utilize the credit. The rejection was based on the premise that the credit could have been used for service tax payment in DTA. The appellants cited the Navbharat Industries case to support their claim, emphasizing the Tribunal's observation that refunds should be allowed "for any reason," including scenarios like the appellants'. The lower authorities did not consider this precedent.

Regarding disallowed CENVAT credit and invoices in favor of different entities, the original authority held certain amounts inadmissible for refund without detailed discussion. The judgment highlighted that credit denial based solely on invoice names is not always justified, citing Rule 9(2) of CCR. The Tribunal advised reconsidering these aspects during the refund claims review. Additionally, discrepancies in invoice periods and refund claims were noted, requiring clarification and adjustment during the reassessment process.

In conclusion, the appeals were allowed, subject to the outlined observations, and remanded to the original adjudicating authority for a fresh review of the refund claims. The authority was instructed to sanction refunds in accordance with the judgment and reassess the eligibility criteria based on the provided guidelines.