2018 (5) TMI 1137 - AT - Service Tax

Refund of unutilized CENVAT credit - rejection mainly on the ground that the services in question have no direct nexus with the output services - Held that - all the services in question stands approved by the approval committee of SEZ as approved services. Under the cenvat credit Rules and the N/N. 5/2006 CE (NT) there is no condition that in order to avail refund the assessee must show one to one co-relation of input service with the output services. Once the service has been used with the output service provider, the claimant becomes eligible for the refund. There is no dispute about the fact that the services have been consumed by the Appellant in rendering export services whether directly or indirectly and hence there is no reason to deny the refund claim of the same. Refund claim on Rent A cab Services - Held that - the Appellant has used the same for their business purposes. Further the service was approved by the Approval committee as specified services in SEZ and were used in authorized operations - refund allowed. Appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against refund claim of service tax under Business Auxiliary Services category.

Analysis:
The revenue filed appeals against the refund claim of service tax by the respondent under Business Auxiliary Services. The Commissioner (Appeals) had allowed the refund claim partially, rejecting a substantial amount due to insufficient details and non-compliance with certain conditions. The revenue argued that only services directly used in providing export services are eligible for refund, emphasizing the critical nexus between input and exported services. They also contended that certain services like Rent A Cab are not eligible for refund. On the other hand, the respondent argued that the definition of input services is broad and covers all services claimed for refund. They cited various judgments and circulars to support their claim that a direct one-to-one correlation between input and output services is not required for refund eligibility. They also refuted the revenue's claims regarding non-debit of amount and non-consumption of services in SEZ authorized operations.

The Tribunal found that the revenue's main contention was the lack of direct nexus between the input services and output services claimed for refund. However, it observed that all services in question were approved by the SEZ approval committee and met the criteria under the Cenvat Credit Rules and relevant notifications. The Tribunal highlighted circulars emphasizing the broad interpretation of input services and the nexus requirement for refund eligibility. It noted that the services in question were consumed in rendering export services, directly or indirectly, making the refund claim valid. The Tribunal referred to previous judgments and the definition of input services to support its decision to uphold the Commissioner (Appeals)'s order.

The Tribunal concluded that the refund claim on input services was justified as they were utilized for business activities, in line with previous judicial interpretations. It cited the Supreme Court's ruling on the integrally connected nature of services with the business. The Tribunal also emphasized consistency in granting refunds for similar cases and dismissed the revenue's appeal. It further confirmed the eligibility of refund claim on Rent A Cab services, as approved by the SEZ approval committee and used in authorized operations. Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision and rejected all appeals filed by the revenue, affirming the respondent's eligibility for the service tax refund on input services.