2016 (5) TMI 942 - AT - Service Tax

Entitlement of Cenvat credit and consequential refund - Rule 5 of Cenvat Credit Rules, 2004 - Works Contract Services and short term accomodation service - maintenance of office equipment and building - Works contract services are excluded from the definition of input service under Rule 2(l) ibid and accommodation is for employees of the company - Held that - it is clear that Works Contract Services are excluded only when it is used for construction service, whereas in the present case input services were used for maintenance of office equipment and building therefore, this particular works contract service does not fall under the exclusion category in the definition of input service, therefore works contract service in the present case is input service and eligible of refund under Rule 5. As regard the service of short term accommodation and works contract service, since the appellant has withdrawn the claim of refund on this, the rejection of refund on services of short term accommodation and service involved in the said invoice of M/s. Benchmark Engineering Pvt Ltd stand upheld. Entitlement for interest on delayed sanctioned of refund claim - Held that - if there is delay beyond three months from the filing of refund, the department is duty bound to grant the interest for the delayed period in sanctioning the refund. The sanction of refund is as per the prescribed rate of interest under Section 11BB of the Central Excise Act supported by the judgment of Supreme Court judgment of Commissioner of Central Excise Vs. Reliance Industries Ltd. 2011 (7) TMI 1141 - SUPREME COURT . It is found that there is absolutely no reason for not granting the interest on the delayed sanction of refund claim. I therefore direct that appellant shall be granted interest under Section 11BB. - Decided partly in favour of appellant

Summary

Issues:
1. Refund claim rejection on certain services
2. Exclusion of Works Contract Services and Short Term Accommodation Services from refund
3. Entitlement for Cenvat Credit and consequential refund under Rule 5 for Works Contract Service
4. Entitlement for interest on delayed sanction of refund claim

Analysis:
The case involves two appeals against Orders-in-Appeal passed by the Commissioner of Service Tax (Appeals), Pune, concerning the rejection of refund claims on certain services. The appellant, engaged in providing export services, filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004. The Adjudicating authority partially sanctioned the amount but rejected the claim on Works Contract Services and Short Term Accommodation Services. The Commissioner partly allowed the refund but also rejected it on the mentioned services. The appellant challenged this decision, leading to the current appeal.

Regarding Works Contract Services, the appellant argued that the services were for maintenance, not construction, making them eligible for refund under Rule 5. The appellant also sought interest on the delayed refund sanction, citing Section 11BB of the Central Excise Act. The appellant relied on a judgment involving Reliance Industries Ltd to support the claim for interest. The Revenue, represented by the Asstt. Commissioner, reiterated the findings of the impugned order.

The Tribunal analyzed the definition of "input service" under Rule 2(l) of the Cenvat Credit Rules, 2004, and concluded that Works Contract Services are excluded only when used for construction services. Since the services in question were for maintenance, they did not fall under the exclusion category, making them eligible for refund under Rule 5. As the appellant withdrew the claim for Short Term Accommodation Services and a specific invoice, the rejection of refund on those services was upheld.

Regarding interest on delayed refund, the Tribunal held that the department is obligated to grant interest if there is a delay beyond three months from the filing of the refund claim. Citing Section 11BB of the Central Excise Act, the Tribunal directed that the appellant should be granted interest for the delayed period in sanctioning the refund. The judgment in the case of Reliance Industries Ltd supported this decision. Consequently, the appeals were partly allowed, and the appellant was granted interest on the delayed refund sanction.

In conclusion, the Tribunal ruled in favor of the appellant on the eligibility of Works Contract Services for refund and the entitlement to interest on the delayed sanction of the refund claim, emphasizing the statutory obligation to provide interest for delays in refund processing.