2020 (1) TMI 186 - AT - Service Tax

Refund of service tax - export of services - rejection on the ground of time-barred or no nexus with the service received and service exported - also alleged that the payment has not been received from the service recipient - Rule 5 of the CENVAT Credit Rules, 2004 - whether the refund claims are time-barred? - HELD THAT - As the issue has been settled by the Larger Bench of the Tribunal CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. 2018 (2) TMI 946 - CESTAT BANGALORE holding that the time-limit under Section 11B of the Act for filing refund claims of Rule 5 of the CENVAT Credit Rules, 2004 has to be counted one year from the last date of the quarter and not from the date of receipt of FIRCs - Admittedly, the refund claim for the quarter January, 2015 to March, 2015 and April, 2015 to June, 2015 are filed on 11/03/2016 which are well within the one year period - the refund claims for January, 2015 to June, 2015 cannot be rejected as time-barred. Whether the amount of refund claim of ₹ 5,55,616/- can be rejected on the ground that the same pertains to earlier period? - HELD THAT - The refund claim has been filed in time. Therefore, refund of ₹ 5,55,616/- cannot be held to be time-barred. Therefore, the said refund claim is admissible to the appellant. Whether the refund claim can be rejected on the ground that there was no nexus with input service and the service exported at the time of entertaining refund claims? - HELD THAT - It is an admitted fact that, at the time of availment of CENVAT credit on input service on general insurance , it was not questioned to the appellant of this service having no nexus with the services exported by them. Therefore, the same cannot be questioned at the time of entertaining refund claim as held by this Tribunal in VERISIGN SERVICES INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX BANGALORE SERVICE TAX- I 2018 (2) TMI 927 - CESTAT, BANGALORE . Further, the said insurance has been availed by the appellant in insurance of various movable assets which has been used for providing output service - Further, whether CENVAT credit is admissible on the service has been decided by the Tribunal in the case of M/S SARITA HANDA EXPORTS (P) LTD. VERSUS CCE, GURGAON-II 2016 (7) TMI 554 - CESTAT CHANDIGARH wherein it has been held that the said service is having direct nexus with the output service provided by the appellant - on merits also the appellant is entitled to avail CENVAT credit on general insurance . Therefore, refund of the said CENVAT credit cannot be rejected. Whether it is mandatory that the service recipient itself is required to make payment for the service received and then only refund can be entertained? - HELD THAT - There is no provision in law that payment of service provided by the appellant has to be made by the service recipient for entertaining refund application. It is a fact on record that the appellant provided the service and received FIRCs against those service. Therefore, refund claim is admissible to the appellant. The refund claims, except ₹ 1,35,319/- and ₹ 3,549/- on account of tour operator service , the appellant is entitled to claim refund - Appeal allowed in part.

Summary

Issues:
1. Whether the refund claims are time-barred.
2. Whether the amount of refund claim of ?5,55,616/- can be rejected on the ground that the same pertains to an earlier period.
3. Whether the refund claim can be rejected on the ground that there was no nexus with input service and the service exported at the time of entertaining refund claims.
4. Whether it is mandatory that the service recipient itself is required to make payment for the service received and then only the refund can be entertained.

Issue (a): Whether the refund claims are time-barred:
The Tribunal held that the time-limit for filing refund claims under Rule 5 of the CENVAT Credit Rules, 2004 has to be counted one year from the last date of the quarter, not from the date of receipt of FIRCs. Refund claims for January 2015 to June 2015 were within the one-year period, thus not time-barred. However, refund claims for October 2014 to December 2014 were rejected as time-barred.

Issue (b): Whether the amount of refund claim of ?5,55,616/- can be rejected on the ground that the same pertains to an earlier period:
Since the refund claim was filed in time, the amount of ?5,55,616/- cannot be considered time-barred. Therefore, this refund claim is admissible to the appellant.

Issue (c): Whether the refund claim can be rejected on the ground that there was no nexus with input service and the service exported at the time of entertaining refund claims:
The Tribunal held that the input service of 'general insurance' was not questioned at the time of availing CENVAT credit, so it cannot be objected to during the refund claim process. The insurance was used for assets providing output service, establishing a direct nexus. Previous Tribunal decisions supported the admissibility of CENVAT credit on 'general insurance', further validating the appellant's entitlement to the refund.

Issue (d): Whether it is mandatory that the service recipient itself is required to make payment for the service received and then only the refund can be entertained:
The law does not mandate that the service recipient must make payment for the service to entertain a refund application. As the appellant provided services and received FIRCs against them, the refund claim is deemed admissible.

In conclusion, except for ?1,35,319/- and ?3,549/- related to 'tour operator service', the appellant is entitled to claim the refund. The impugned order was modified accordingly, and the appeal was disposed of with consequential relief.