2018 (9) TMI 258 - AT - Service Tax

Refund of service tax - Input services - denial of credit on the ground that certain input services are not covered by the definition of input services and also on the ground of nonsubmission of documents required to process the claim - Held that - The Order-in-Original as well as impugned order, both have rejected the refund claims on other grounds which are not taken in the show-cause notices and therefore they have travelled beyond the showcause notices which is not legally permissible - further, the impugned order also violates the principles of natural justice because the appellant has not been given the reasonable opportunity to defend himself on the ground on which the refund claims have been rejected. Denial of refund on the ground that the appellant has not produced the approved list of specified input services from the UAC of SEZ - Held that - Keeping in view the intention of the Government in enacting the SEZ Act and giving special fiscal concessions to SEZs, It is held that this is only a procedural and is not a mandatory condition as held by the Commissioner(Appeals) - this ground on the basis of which refund claims have been rejected is not tenable. CENVAT Credit - rejection on the ground that appellant has availed the cenvat credit and hence he is not entitled to file the refund claim - Held that - The appellant has already reversed the CENVAT credit without any utilization and it has been shown in ST-3 return filed for the period April 2015 to September 2015 and once he has reversed the CENVAT credit without utilization, it tantamounts to not taking credit - refund allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of refund claims by the Commissioner(Appeals) based on non-compliance with conditions of Notification No.12/2013.
2. Allegations of non-submission of required documents and eligibility of refund claim.
3. Compliance with SEZ Act regarding UAC approval and CENVAT credit availed.
4. Violation of principles of natural justice in rejecting refund claims.
5. Legal interpretation of mandatory conditions for refund claims under SEZ Act and Notification No.12/2013.

Analysis:
1. The appeals were against the common impugned order rejecting refund claims on grounds such as absence of UAC approval for specified services, non-payment of duty payment challans, availing CENVAT credit, and discrepancies in invoices. The appellant argued that the order exceeded the show-cause notice's scope and violated natural justice principles citing relevant case laws.
2. The appellant contended that UAC approval is not mandatory for refunds, emphasizing SEZ Act's overriding effect on other laws. Case laws were cited to support the argument that procedural infractions should not lead to refund rejection. The appellant also highlighted that CENVAT credit reversal without utilization qualifies as non-availing credit, allowing exemption benefits.
3. The AR defended the impugned order, asserting the necessity of UAC approval under the SEZ Act and compliance with Notification No.12/2013 conditions for CENVAT credit. The Tribunal noted that the rejection based on grounds beyond the show-cause notice was impermissible and violated natural justice principles.
4. The Tribunal held that the impugned order's rejection of refund claims was legally unsustainable. It emphasized the SEZ Act's intent to provide fiscal concessions, rendering UAC approval procedural rather than mandatory. The reversal of CENVAT credit without utilization was deemed equivalent to non-availing credit, entitling the appellant to exemption benefits.
5. The Tribunal scrutinized the appellant's compliance with payment dates through bank statements and chartered accountant certificates, concluding that the refund claims should be allowed based on legal interpretations and case laws cited. The impugned order was set aside, granting relief to the appellant.