2021 (2) TMI 159 - AT - Service Tax

Refund of lying unutilized in their CENVAT credit account - admissibility of CENVAT Credit - denial to the appellant on the ground that the service on which they are taken the cenvat credit is not input service in terms of Rule 2(l) of the CENVAT Credit Rules, 2004 - N/N. 27/2012 dt. 18.06.2012 - HELD THAT - It is an admitted fact on record that the appellant has taken the cenvat credit on rent a cab service where the service provider has charged the service tax from them and for the remaining invoices, they have paid the service tax under reverse charge mechanism and availed the cenvat credit of the same. It is also a fact on record that at the time of availement of the cenvat credit, it was never disputed that the appellant is not entitled to the cenvat credit on the service in question. The dispute in the matter is of sanction of refund claim of unutilized cenvat credit in their account not the issue of availment of the cenvat credit on the input service, therefore, the Revenue has fell in error and wants to raise the issue of availment of the cenvat credit while entertaining the refund claim. In case, the appellant had not filed the refund claim, the appellant was entitled of the cenvat credit which was not objected at the time of availment. At the time of entertaining the refund claim, the issue of admissibility of the CENVAT credit cannot be raised - Appeal allowed.

Summary

Issues:
Refund claim denial based on service not considered input service under Cenvat Credit Rules, 2004.

Analysis:
The appellant, a provider of output services, filed refund claims for unutilized cenvat credit in their account, which were partly sanctioned but denied in part for "rent a cab service" on the grounds that vehicles rented were not registered in the name of the service provider, thus not considered capital goods under Rule 2(l) of the Cenvat Credit Rules, 2004. The appellant argued that since they paid service tax under reverse charge mechanism and availed cenvat credit without objection, they are entitled to the credit. The Revenue contended that the service in question did not qualify as an input service under the rules. The Tribunal noted that the dispute was about the refund claim, not the initial availment of the credit, and held that the Revenue erred in raising the credit availment issue during the refund claim consideration. The Tribunal ruled in favor of the appellant, setting aside the denial of the refund claim.

In conclusion, the Tribunal allowed the appeals, providing consequential relief to the appellant.