2016 (12) TMI 161 - AT - Service Tax

Refund claim - cenvat credit that remains unutilized in the cenvat account due to non-submission of certificate of receipt of the payment in convertible foreign currency - whether various input services like service tax paid on insurance services and the service tax paid on food vouchers (meal coupons) are eligible for availing cenvat credit or otherwise? - Held that - On perusal of the certificates given by appellant s bank i.e. Deutsche Bank, we find that the appellant s bank has clearly recorded that the amount is credited to their account, but the certificate is for foreign inward remittances and vide their letter dated 30.1.2012, they had specifically stated that the entire foreign inward remittance is received in convertible foreign exchange. We also were informed that there is no dispute as to the exports undertaken by the appellant. In our considered view, when there is no dispute as to the exports of the services rendered by the appellant, and no dispute as to the availment of the cenvat credit or eligibility thereof, the only reason for denying cenvat credit that the amounts are not received in convertible foreign currency seems to be irrational way of denying the legitimate refund to an assessee - reliance placed on the decision of the case of Sun-Area Real Estate Pvt Ltd Versus Commissioner of Service Tax, Mumbai-I 2015 (39) S.T.R. 897 (Tri. - Mumbai) where it was held that certificates for a produced of foreign inward remittances, though in Indian rupees, cenvat credit cannot be denied as it is a certificate of foreign inward remittances. Cenvat credit availed on the service tax paid on insurance services - Held that - the lower authorities have denied the refund only on the ground that the said insurance also covers the dependents of the employees who are insured - it is held that such cenvat credit cannot be denied and refund has to be sanctioned. Service tax credit of the service tax paid on the meal coupons - Held that - such credit is available and refund needs to be sanctioned if the services are exported. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Refund of unutilized cenvat credit due to non-submission of foreign currency receipt certificate, eligibility of cenvat credit on input services like insurance services and food vouchers.

Analysis:
1. Refund of unutilized cenvat credit: The issue revolved around the denial of refund claim by the lower authorities due to non-receipt of amounts in convertible foreign currency for software exports. However, the appellant's bank confirmed the receipt in foreign exchange. The tribunal noted that when there is no dispute regarding the exports or cenvat credit eligibility, denying credit based on currency form is unjust. Citing precedents, the tribunal emphasized that certificates of foreign inward remittances, even in Indian rupees, should not be a reason to deny cenvat credit.

2. Cenvat credit on insurance services: The lower authorities rejected the refund based on insurance services covering dependents of insured employees. The tribunal, considering a Mumbai Tribunal decision, held that such credit cannot be denied, and refund must be granted. The decision highlighted that denial based on coverage of dependents is not a valid ground to refuse cenvat credit.

3. Cenvat credit on meal coupons: The tribunal referred to a Mumbai Tribunal case where it was established that service tax credit on meal coupons is available, and refund should be sanctioned for exported services. This decision clarified that availing credit on service tax paid on meal coupons is legitimate if the services are exported.

In conclusion, the tribunal found the impugned orders unsustainable and set them aside, allowing the appeals in favor of the appellant. The judgment emphasized the importance of considering the factual matrix and legal precedents while deciding on cenvat credit refund claims and eligibility of input services for credit.