2019 (10) TMI 1147 - AT - Service Tax

Refund of CENVAT Credit - input services - Rule 5 of Cenvat Credit Rules, 2004 - refund denied on the ground that the services for which refund has been filed are not input services in terms of Rule 2(l) of Cenvat Credit Rules, 2004 - HELD THAT - It was not disputed that at the time of availment of credit on the services in question, therefore, at the time of filing refund claim, it cannot be disputed the credit lying unutilized are not input services in terms of Rule 2 (l) of Cenvat Credit Rules, 2004 in the light of the decision of this Tribunal in the case of VERISIGN SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I 2018 (2) TMI 927 - CESTAT, BANGALORE . The refund claim cannot be denied merely on the premise that services in question on which Cenvat credit remained unutilized in Cenvat credit are not Input Services - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim denial under Rule 5 of Cenvat Credit Rules, 2004 on the ground of services not being input services.

Analysis:
The appellant appealed against the denial of a refund claim under Rule 5 of Cenvat Credit Rules, 2004, contending that the services for which the refund was sought were not considered input services under Rule 2(l) of the same rules. The appellant, engaged in exporting services, filed a refund claim for unutilized Cenvat credit accumulated from October to December 2016. The claim of ?21,58,241 was rejected on the basis that the services for which credit was taken and remained unutilized did not qualify as input services. The appellant challenged this decision before the Tribunal.

During the hearing, it was noted that there was no dispute that the services in question were considered input services at the time of availing the credit. The Tribunal referred to a previous decision in the case of Verisign Services India Pvt. Ltd., where it was established that the denial of a refund claim solely on the grounds of services not being classified as input services at a later stage was not justified. It was emphasized that the availment of Cenvat credit could not be questioned at a later stage, and the denial of a refund claim on these grounds was unwarranted. Therefore, the Tribunal held that the appellant was entitled to the refund claim under Rule 5 of the Cenvat Credit Rules, 2004.

Based on the above analysis and legal precedent, the Tribunal concluded that the denial of the refund claim solely on the premise that the services in question did not qualify as input services was incorrect. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed appropriate.

In summary, the Tribunal ruled in favor of the appellant, emphasizing that the denial of a refund claim based on the classification of services as non-input services at a later stage was not valid. The appellant was granted the refund claim under Rule 5 of the Cenvat Credit Rules, 2004, and the impugned order was overturned, allowing the appeal with any necessary consequential relief.