2018 (11) TMI 758 - AT - Service Tax

Refund of CENVAT credit - denial on account of nexus - Management Consultant Services - Held that - Admittedly the service provider has paid the Service Tax. Irrespective of the fact under which category the said Service Tax has been paid, the appellant has utilized his services, which are required for providing output services. As such the Service Tax paid by the service provider would be admissible as a credit to the assessee and consequently as a refund in terms of the provisions of Rule 5 of Cenvat Credit Rules read with the Notification in question - refund allowed. Refund claim - Event Management and Commercial Training - Held that - The said issue already stands considered by the Tribunal in the appellant s own case reported as Steria India Ltd. v. CC & C.EX., Noida 2013 (12) TMI 212 - CESTAT NEW DELHI laying down the said services as Cenvatable input services and the appellant being entitled to the refund of the same - refund allowed. Demand of Interest - Interest portion in respect of ₹ 20.98 Lakhs withdrawn by the appellant from their claim of refund and reversed from their Cenvat credit account - Held that - There are no proceedings from the Revenue proposing to deny the said credit. In any case the said credit so availed by the appellant remained only a paper entry and was not utilized by them, inasmuch as there was no scope of utilization, the appellant being an export unit and the credit so availed was refundable to them in cash - the reversal of the wrongfully availed credit without utilization will not attract any interest liability - demand of interest also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of Cenvat Credit for input services utilized in providing export services; Denial of Cenvat Credit for specific services; Interest liability on wrongly availed credit.

Refund of Cenvat Credit for input services utilized in providing export services:
The appellant, engaged in export of Information Technology Software Services, claimed a refund of around &8377; 4.24 Crores for the quarter January 2011 to March 2011. While a significant portion of the refund was sanctioned, proceedings were initiated to deny the balance refund claim on the grounds of certain input services not being relatable to output export services. The Order-in-Original and Order-in-Appeal denied a total refund of &8377; 5,81,153/- in relation to specific services. However, the Tribunal allowed the refund of &8377; 4,50,111/- for Management Consultant Services and &8377; 97,129/- and &8377; 33,913/- for Event Management and Commercial Training services, respectively. The Tribunal held that the Service Tax paid by the service provider for utilized services would be admissible as credit to the appellant under Rule 5 of Cenvat Credit Rules, leading to a refund.

Denial of Cenvat Credit for specific services:
Regarding the denial of Cenvat Credit for Management Consultant Services, the lower authorities contended that the agreement between the appellant and the service provider was solely for searching a HR director, not constituting Manpower Recruitment Services eligible for credit. However, the appellant argued that the services resulted in the appointment of the HR director, qualifying as Manpower Recruitment Services. The Tribunal observed that regardless of the service category under which Service Tax was paid, if the services were utilized for providing output services, the appellant could avail credit and subsequent refund. Hence, the Tribunal allowed the refund of &8377; 4,50,111/- for Management Consultant Services.

Concerning Event Management and Commercial Training services, the Tribunal referenced a previous decision in the appellant's case, establishing these services as Cenvatable input services eligible for refund. Accordingly, the Tribunal allowed the refund of &8377; 97,129/- and &8377; 33,913/- for these services.

Interest liability on wrongly availed credit:
The appellant withdrew a credit of &8377; 20.98 Lakhs from their refund claim and reversed it from their Cenvat credit account, asserting that the credit was not available to them. Despite no Revenue proceedings proposing to deny the credit, the Tribunal noted that the credit remained unused and was refundable in cash due to the appellant being an export unit. Citing precedents from the Karnataka and Madras High Courts, the Tribunal ruled that the reversal of wrongfully availed credit without utilization does not attract interest liability. Consequently, the Tribunal set aside the demand for interest.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant, emphasizing the eligibility of certain input services for Cenvat Credit refund and the absence of interest liability in specific scenarios.