2018 (11) TMI 753 - AT - Service Tax

Refund of CENVAT credit - denial on the ground that appellant did not hold a Service Tax Registration at the material point of time - Held that - The issue decoded in the case of mPortal India Wireless Solutions P. Ltd. 2011 (9) TMI 450 - KARNATAKA HIGH COURT , where it was held that Registration not compulsory for refund - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Denial of cenvat credit due to lack of Service Tax Registration at branch office, contention of branch office being an exempted unit in SEZ, rejection of refund claim by Revenue, imposition of penalty and interest.

Analysis:
1. The appellant, engaged in Information Technology Services, filed appeals challenging the denial of cenvat credit by the Revenue due to the branch office not holding a Service Tax Registration. The appellant had utilized cenvat credit, including service tax paid at the branch office. An audit revealed certain invoices with the branch office address were deemed ineligible, leading to the reversal of cenvat credit, payment with interest under protest, and a subsequent refund claim. The Revenue issued a show-cause notice rejecting the refund claim, resulting in an Order-in-Original confirming the denial, along with penalties and interest.

2. Upon hearing arguments from both parties and reviewing the impugned order, it was noted that the denial of cenvat credit was primarily due to the branch office's lack of Service Tax Registration at the relevant time. The appellant contended that the branch office was an exempted unit in SEZ, absolving it of service tax liability. Reference was made to a High Court ruling in a similar case, emphasizing that even non-taxable services could not deny cenvat credit. The court held that the absence of a statutory provision mandating registration for claiming cenvat credit rendered the denial by lower authorities incorrect and unsustainable.

3. The decision of the jurisdictional High Court, supported by subsequent rulings, established a precedent that registration was not a prerequisite for claiming cenvat credit. Consequently, the denial of credit by the lower authorities was deemed incorrect, and the appellant's appeals were allowed with any consequential benefits. The judgment emphasized the importance of legal precedent in resolving similar issues and upheld the appellant's entitlement to cenvat credit and refund claims.

Conclusion: The judgment addressed the denial of cenvat credit, the contention of SEZ exemption, rejection of refund claims, and the imposition of penalties and interest. By following legal precedent and emphasizing the absence of a statutory provision mandating registration for claiming cenvat credit, the tribunal ruled in favor of the appellant, allowing the appeals and setting aside the denial of credit by the Revenue.