2018 (5) TMI 1413 - AT - Service Tax

Refund of unutilized CENVAT credit - denial on the ground of time bar as well as on lack of nexus in regard to certain services - Held that - as far as rejection of refund on time bar is concerned by following the Larger Bench decision in the case of CCE&CST Bangalore Vs. Span Infotech (India) Pvt. Ltd. 2018 (2) TMI 946 - CESTAT BANGALORE where it has been held that relevant date of one year for the purpose of time limit for consideration of refund under Rule 5 of CCR may be taken as the end of the quarter in which the FIRCs are received. With regard to nexus both the services have a nexus with the output services exported. As far as inconsistency in the computation of amount eligible for refund is concerned the original authority will examine it and will decide afresh by applying the correct formula. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Refund of unutilized CENVAT credit on input services for exported Information Software Services (ITSS).
2. Rejection of refund on grounds of time bar and lack of nexus.
3. Denial of refund on certain input services like club & association service and outdoor catering service.
4. Inconsistency in the computation of the amount eligible for refund.

Analysis:
1. The appellant filed appeals against an order partially allowing refund on certain input services and denying on others. The issue was the refund of unutilized CENVAT credit for ITSS export under CCR 2004. The Commissioner(Appeals) rejected part of the refund citing a judgment on the relevant date for time limit computation. The appellant argued for a different interpretation based on service export. A Larger Bench decision clarified the relevant date for refund consideration.

2. The Revenue defended the orders, citing Notification No.27/2012 and a judgment specifying the relevant date for export services. The appellant contested the rejection of input credit for club & association service and outdoor catering service, emphasizing their business-related usage. Legal precedents were cited to support the eligibility of such services for CENVAT credit. The AR argued against the inclusion of outdoor catering service, citing an exclusion post-2011, but the period in question was pre-2011.

3. The rejection of the refund claim was also based on the inconsistency in computing the eligible amount. The appellant highlighted an error in the computation method and emphasized that the refund should be based on CENVAT credit taken, not post-utilization. The Tribunal held that the relevant date for the time limit was clarified by the Larger Bench decision and that the input services had a nexus with the exported output services. The case was remanded for a fresh examination of the refund claim.

4. The judgment concluded by setting aside the impugned order and directing the original authority to reconsider the claim in light of the Larger Bench decision and the discussions presented. Both appeals were allowed by way of remand, emphasizing the need for correct computation and consideration of the nexus between input and output services.