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2022 (1) TMI 319 - AT - Service TaxRefund of service tax - rejection on the ground that services were not exported, no nexus between services availed vis a vis services rendered as well as missing/ ineligible invoices - time limitation - HELD THAT - The relevant Circular No. 141/10/2011-TRU dated 13.05.2011 on which learned Commissioner (Appeals) had placed heavy reliance but a comparison at his order at page 11 12 vis-avis the content of para 3 4 of the said Circular dated 13.05.2011 would clearly indicate that he had applied the provisions partly without thoroughly examining the clarification made in that Circular in its entirety. It is needless to mention here that appellant s claim is to be supposed to be determined in terms of Circular No. 111/05/2009 dated 24.02.2009. Basing on which this Tribunal has passed several orders including in the case of the COMMISSIONER OF SERVICE TAX-VII MUMBAI VERSUS M/S. ABBOTT HEALTHCARE PVT. LTD. 2019 (12) TMI 232 - CESTAT MUMBAI and M/S BLACKSTONE ADVISORS INDIA PVT. LTD. VERSUS COMMISSIONER OF C.G. ST. -MUMBAI SOUTH 2019 (11) TMI 1459 - CESTAT MUMBAI . Moreover, as could be noticed during hearing of the appeal and subsequent filing of proof on 29.10.2011 by way of additional evidence, appellant had filed an application for rectification of mistake in the order passed by the Commissioner (Appeals) in forming an opinion that appellant is a subsidiary of Foreign Institutional Investors (FIIs) without having any existence of its own, besides other grounds and it was not dealt with by the Commissioner (Appeals). Going by para 4 of the said Circular dated 13.05.2011, it can be said that such an opinion of holding the appellant as passive holding/subsidiary company or associated enterprise has a bearing on determination of its eligibility as an export service provider and without hearing the appellant on this score, no opinion should have been formed by the Commissioner (Appeals). This is a fit case which is required to be remanded back to the Commissioner (Appeals) to re-examine the appellant s eligibility to get refunds in respect of those 4 items after reexamination of the Circular dated 13.05.2011 and its applicability in the case of appellant disregarding the place of provision of service Rule, 2012 that came into force after the claim period - appeal allowed by way of remand.
Issues:
1. Rejection of refund claim on the ground of services not being exported and missing/ineligible invoices. 2. Interpretation of relevant Circulars and Rules for determining eligibility for refund claims. 3. Consideration of nexus between input and output services for export of services. 4. Observations made without supporting material leading to rejection of refund claims. 5. Retrospective effect of Circulars and their applicability to the case. Analysis: 1. The case involved the rejection of a refund claim amounting to ?5,61,150 out of ?6,34,080 on the basis that services were not exported and due to missing/ineligible invoices. The appellant, engaged in Portfolio Management and Investment Advisory Services, challenged the rejection before the Appellate Tribunal, except for an amount of ?72,930 held to be time-barred. 2. The appellant argued that the order of rejection by the Commissioner (Appeals) was not in line with the clarificatory Circular No. 141/10/2011-TRU and the Place of Provision of Service Rules, 2012. The appellant contended that the nexus between input and output services for export of services should not have been considered while granting refunds, citing Circular No. 120/01/2010-ST. The Tribunal noted discrepancies in the application of Circulars and directed a re-examination of the eligibility for refunds based on the Circular dated 13.05.2011. 3. The Commissioner (Appeals) had made observations regarding the appellant being a passive holding Company of Foreign Institutional Investors without substantial evidence, which the Tribunal deemed as erroneous. The Tribunal emphasized the need for a proper examination of the appellant's eligibility for refunds, especially in light of the Circular dated 13.05.2011, which had not been adequately considered in the initial rejection. 4. The Tribunal found that the order passed by the Commissioner (Appeals) lacked thorough examination of the relevant Circulars and Rules, leading to an incorrect rejection of the refund claim. The Tribunal highlighted the importance of considering all aspects, including the effective use and enjoyment of services, before making a determination on refund eligibility. 5. In conclusion, the Tribunal allowed the appeal by remanding the case for re-hearing based on the observations made regarding the misapplication of Circulars and Rules. The order of the Commissioner of Central Tax (Appeals-I), Mumbai was set aside, emphasizing the need for a re-examination of the appellant's eligibility for refunds in light of the Circular dated 13.05.2011 and disregarding the Place of Provision of Service Rule, 2012 that came into force after the claim period.
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