2021 (7) TMI 898 - AT - Service Tax

Refund of credit availed on the service tax paid on input services - Information Technology Services and also export of same service - reverse charge mechanism - period July, 2013 to September, 2013 - refund denied on the ground that the said credit has not been shown in the ST-3 returns - HELD THAT - It is not in dispute that the appellants are eligible for credit to the tune of ₹ 16,93,074/- on the service tax paid by them under reverse charge mechanism on input services availed by them. The only reason for denying the credit is that they have not reflected such availment of credit in ST-3 returns for July, 2013 to September, 2013 - The services having been exported, the service tax paid on the input services used for export of services should be refunded to the appellants as per Rule 5 of Cenvat Credit Rules, 2004. The appellants have properly accounted in their books of account. Not mentioning the credit availed in ST-3 returns is only a procedural lapse, which can be condoned. The appellants are eligible for refund as claimed by them - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim eligibility based on non-mention of credit in ST-3 returns.

Analysis:
The appellants, engaged in Information Technology Services and exporting the same, applied for a refund under Rule 5 of Cenvat Credit Rules, 2004 for the period July, 2013 to September, 2013. The department contended that the appellants are not eligible for the refund due to the non-mention of credit in their ST-3 returns. The Commissioner (Appeals) upheld the department's view, denying the refund of &8377; 16,93,074/-. The appellants argued that the credit was properly accounted for, although not reflected in the ST-3 returns. An undertaking was given to the department regarding not claiming the credit for subsequent periods. The department, however, denied the credit solely based on the omission in the ST-3 returns, without disputing the eligibility for the credit. The appellants contended that the denial was unjustified and requested the appeal to be allowed.

During the hearing, the appellants' counsel argued that the denial of credit solely on the grounds of non-mention in the ST-3 returns was unwarranted. The Authorised Representative for the department supported the decision, emphasizing the importance of reflecting availed credit in the returns for verification purposes. The Tribunal noted that the appellants were indeed eligible for the credit on service tax paid under reverse charge mechanism for input services used in exporting services. The failure to mention the credit in the ST-3 returns was considered a procedural lapse, which should not bar the refund entitlement under Rule 5 of Cenvat Credit Rules, 2004.

Consequently, the Tribunal held that the appellants were entitled to the refund as claimed, setting aside the impugned order. The appeal was allowed, granting consequential reliefs as necessary.