2018 (12) TMI 865 - AT - Service Tax

Refund claim - export of services - Rule 5 of the Cenvat Rules read with the provisions of Notification No. 27/2012- CE(NT) dated 18-06-2012 - denial on account of nexus. Held that - The transaction undertaken by the appellants qualified to be export of service , as defined under Rule 6A of the Service Tax Rules, 1994. Since they were not in a position to utilize the accumulated Cenvat Credit, refund claim has been filed in terms of Rule 5 of Cenvat Credit Rules, 2004 read with the provisions of Notification No.27/2012 CE (NT) dated 18.06.2012. Some of the input services do not qualify the definition of input services in terms of Rule 2 (e) of the Cenvat Credit Rules, 2004 - Held that - Tribunal in various decisions has consistently held that there cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate. Whatever credit has been permitted to be taken, the same are permitted to be utilized and when the same is not possible, there is provision for grant of refund or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned. Denial on the ground that the invoices are un-signed - Held that - It is not in dispute that the payments have been made through Bank Account and this fact is subject to verification - the Adjudicating authority should provide a reasonable opportunity of hearing by observing the principle of natural justice after considering the submissions of the assessee. Appeal allowed by way of remand.

Summary

Issues:
Refund claim disallowance based on lack of nexus between input and output services.

Analysis:
The appellant, engaged in exporting taxable output services, filed a refund claim for input services availed during the period from April 2014 to June 2014. The dispute arose due to disallowance of credit under various heads by the authorities based on the alleged lack of nexus or correlation between the input and output services. The appellant argued that once credit towards input services is allowed without objection, it cannot be deemed inadmissible during the refund process. The appellant cited the Tribunal's decision in a similar case to support this contention.

The Revenue, represented by the ld.D.R., supported the findings of the lower authorities regarding the disallowance of the refund claim. After hearing both sides and reviewing the records, the Judicial Member found that the appellants' transactions qualified as "export of service" under the Service Tax Rules. The dispute centered around the disallowance of the refund claim due to the perceived lack of nexus between the input and output services. The Judicial Member noted that some input services did not meet the definition under the Cenvat Credit Rules.

The Judicial Member emphasized that there should not be different standards for permitting credit and determining eligibility for a refund. The Tribunal's consistent stance was that if credit is permitted, it should be allowed for utilization, and if not feasible, a refund should be granted. The Judicial Member highlighted that the eligibility for a refund cannot be questioned without challenging the credit taken. Additionally, in cases where credit was disallowed due to unsigned invoices, the Judicial Member noted that payments were made through bank accounts, subject to verification. The Judicial Member recommended providing a reasonable opportunity for a hearing and following the principles of natural justice after considering the submissions of the assessee. Both parties were given the liberty to produce evidence in support of their positions.

In conclusion, the Appeals filed by the appellants were allowed by way of remand, emphasizing the need for a fair hearing and verification of facts before making a final decision on the refund claim.