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2021 (3) TMI 559 - AT - Service Tax100% EOU - Refund of unutilized CENVAT credit of service tax availed on input services - Architect - Club or Association services - Event Management services - General Insurance service - HELD THAT - The appellants have given detailed justification for each of these 5 services which have been used by the appellant for rendering the output services. Further, the reasoning given by the Commissioner (Appeals) in the impugned order is not correct in law. The correct position in law is that the true test for eligibility is whether input service is used by the provider of taxable service for providing output service and the input services should not be covered by the exclusion clause - further, all the services, of which refund has been rejected, has been consistently held to be input service in various decisions relied upon by the appellant. Department has not questioned the input service at the time when the CENVAT credit was taken and as per the decision of this Tribunal in the case of K Line Ship Management India Pvt. Ltd. Vs CGST, Mumbai West, 2018 (12) TMI 1481 - CESTAT MUMBAI wherein it has been held that the Department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. The appellant is entitled to refund of CENVAT credit in relation to input services of Architect, Club Association, Event Management, General Insurance and other taxable services which have been used for providing the output services - Appeal allowed in part.
Issues:
Refund claim rejection of input services under CENVAT Credit Rules. Analysis: The appeal challenged the rejection of a refund claim by the Commissioner (Appeals) related to 7 input services utilized for providing exported IT services. The appellant, an EOU under STPI Scheme, sought refund under Rule 5 of CENVAT Credit Rules, 2004. The original authority partially approved the claim but rejected a portion. The Commissioner (Appeals) upheld the rejection for services like Architect, Club, Event Management, General Insurance, Health Club, Other Taxable, and Outdoor Catering totaling ?20,53,480. The appellant contended that the order failed to consider the nexus of input services with output services as per Rule 2(l) of CCR, 2004. The appellant argued that the eligibility test should focus on actual usage of input services for output services, not on adverse impact in their absence. Reference was made to various tribunal and court decisions supporting the input services' classification. Regarding the disputed input services, the appellant argued that Club & Association services were for business benefits, not personal use, and General Insurance covered commercial liabilities, not personal consumption. The appellant highlighted the inconsistency in questioning the eligibility of input services during refund despite unchallenged CENVAT credit availing. Relying on circulars and legal precedents, the appellant sought refund for Architect, Club & Association, Event Management, General Insurance, and other taxable services, excluding Health Club and Outdoor Catering. The tribunal analyzed the submissions, finding the Commissioner (Appeals)' reasoning flawed. It emphasized that eligibility hinges on actual use of input services for output services, not their exclusion. The tribunal noted the consistent classification of the disputed services as input services in prior decisions. It cited precedents barring the Department from questioning CENVAT credit eligibility during refund claims. Additionally, a CBEC clarification and tribunal decisions supported decoupling input services from specific exported output services. Consequently, the tribunal allowed the appeal, granting the refund for the contested input services used in providing output services, partially overturning the Commissioner (Appeals)' decision. In conclusion, the tribunal's detailed analysis and reliance on legal principles and precedents led to the partial allowance of the appeal, affirming the appellant's entitlement to the refund for specific input services utilized in exporting IT services.
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