2016 (12) TMI 856 - AT - Service Tax

Rejection of refund claim - CENVAT credit on input services used for providing exported output services - rejection on the ground that during the period in question appellant was not registered with the department - Held that - the issue is no more res integra as Hon ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore 2011 (9) TMI 450 - KARNATAKA HIGH COURT settled the issue and held that Registration not compulsory for refund - rejection of refund set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on non-registration during the relevant period.

Analysis:
The appellant, a provider of output services exported during a specific period, filed a refund claim for CENVAT credit on input services used for the exported output services. The claim was rejected by lower authorities solely due to non-registration during that period. However, it was undisputed that the services were exported, and the input services were tax paid, making the appellant eligible for CENVAT credit. The Tribunal found the rejection solely on non-registration grounds erroneous, citing a precedent from the Hon'ble High Court of Karnataka. The High Court judgment clarified that registration was not a mandatory condition for claiming CENVAT credit, and the rejection based on lack of registration was legally unfounded.

The Tribunal emphasized that being a 100% export-oriented unit, the appellant was entitled to CENVAT credit, even if the exported software was not a taxable service during the claim period. The Tribunal also noted that the limitation under Section 11B did not apply to the refund of accumulated CENVAT credit. The Tribunal further highlighted that there was no statutory provision mandating registration as a prerequisite for claiming CENVAT credit. Thus, the rejection by the lower authorities was deemed erroneous and set aside.

The Tribunal remanded the matter back to the adjudicating authority for verifying the appellant's claim by providing necessary documents proving payment of input service tax. The appellant was granted the opportunity to substantiate their claim with invoices and receipts. The Tribunal's decision was aligned with the High Court judgment, ensuring that the appellant was not deprived of the entitled refund due to the absence of registration during the relevant period.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and granting relief to the appellant based on the settled legal position established by the Hon'ble High Court of Karnataka. The decision emphasized the importance of substantiating refund claims with proper documentation and directed the adjudicating authority to process the application expeditiously upon verification of the appellant's payment of input service tax.