2018 (6) TMI 667 - AT - Service Tax

Refund of service tax paid - export of services - rejection on the ground that services do not qualify as input service or same falls under exclusion category and also on the ground of non submission of documents - Held that - All the services are essential services used for providing output service therefore refund in respect of cenvat credit on aforesaid services cannot be denied on the ground of nexus - refund allowed. Non submission of documents - Held that - The appellant have submitted invoices and challan through which service tax payment was made and the same were attached as exhibit J1 and J2. From this documents, it is clear that these documents are sufficient for processing refund claim therefore rejection of refund claim on the ground of non submission of documents is also not sustainable. Rejection in respect of some services which constituted as sale of goods - Held that - The payment made towards sale of diesel is nothing but reimbursement towards receipt of services of operating DG set for uninterrupted supply of power for carrying out output service, therefore even though the reimbursement toward supply of diesel, it is related to supply of service to operate DG set. Vendor also paid service tax on such charges - this payment is towards preparation of various study material used for purpose of training needs of the employee which are required to provide out put service of the appellant - credit allowed. Refund claim - erection, commission and installation - rejection on the ground that service cannot be identified form the invoices - Held that - It is clear that service is input service and clearly identifiable hence there was no reason to deny the refund - refund allowed. Rejection of refund claim on consulting charges paid for lease of premises on the ground that the said premises is not registered - Held that - This issue is no longer res-integra as in case of M Portal India wireless solutions P Ltd vs. C.S.T 2011 (9) TMI 450 - KARNATAKA HIGH COURT it was held that merely because premises is not registered credit cannot be denied hence refund is admissible. As regard the claim of the interest, since the said issue is not arising out of order, the same may be decided by the adjudicating authority in accordance with law at the time of sanction of refund claim. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Qualification of services as input services.
2. Services falling under the exclusion portion of Rule 2(l).
3. Non-submission of supporting documents.
4. Computation of refund under Rule 5 of CCR.
5. Allegation of sale of goods instead of services.
6. Rejection of refund on consultancy charges for unregistered premises.

Detailed Analysis:

1. Qualification of Services as Input Services:
The appellant contended that all services were used in providing output services and did not fall under the exclusion category of Rule 2(l) of Cenvat Credit Rules, 2004. The Tribunal found that services like Works Contract Services, Renting of Immovable Property Services, Erection, Commissioning and Installation Services, Management Maintenance and Repair Services, and others were essential for providing output services. Therefore, the refund in respect of Cenvat credit on these services cannot be denied on the ground of nexus.

2. Services Falling Under the Exclusion Portion of Rule 2(l):
The Tribunal examined the nature of services and concluded that except for Works Contract Services, all other services fell under the inclusion category. Even for Works Contract Services, since they were used for repair, maintenance, and renovation of existing buildings, they were not excluded from the ambit of input services. Hence, credit and refund were admissible.

3. Non-submission of Supporting Documents:
The appellant had submitted invoices and challans for service tax payments attached as exhibits J1 and J2. The Tribunal found these documents sufficient for processing the refund claim. Therefore, the rejection of the refund claim on the ground of non-submission of documents was not sustainable.

4. Computation of Refund Under Rule 5 of CCR:
The appellant argued that the computation of refund should be based on the total Cenvat credit availed during the period, not the unutilized credit remaining at the end of the period. The Tribunal agreed, stating that the formula in Rule 5 of Cenvat Credit Rules, 2004, clearly defines 'net Cenvat credit' as the total credit availed. Thus, the Commissioner(Appeals) erred in interpreting the formula, and the rejection of the refund on this basis was not sustainable.

5. Allegation of Sale of Goods Instead of Services:
The Tribunal found that payments made towards the sale of diesel were actually reimbursements for services of operating DG sets for uninterrupted power supply, which were essential for providing output services. Similarly, payments for the preparation of study materials were for training employees, necessary for providing output services. Therefore, the credit for these services was admissible.

6. Rejection of Refund on Consultancy Charges for Unregistered Premises:
The Tribunal noted that various judgments, including M Portal India Wireless Solutions P. Ltd vs. C.S.T, established that credit cannot be denied merely because the premises were not registered. Thus, the refund was admissible.

Conclusion:
The Tribunal set aside the impugned order to the extent it upheld the rejection of the refund claim. The appeals were allowed, and the rejection of the refund claim by the Commissioner(Appeals) was found unsustainable. The issue of interest on the delayed sanctioning of the refund was left to be decided by the adjudicating authority in accordance with the law at the time of sanctioning the refund claim.