2023 (1) TMI 917 - AT - Service Tax

Refund claim - rejection on the ground that balance in the CENVAT register should not be taken into consideration for the purpose of grant of refund benefit and that certain input services were not considered for refund inasmuch as those services have no nexus with the output services provided by the appellant - HELD THAT - The CBE C vide Circular No. 120/01/2010 dated 19.01.2010 has clarified that the closing balance of the previous quarter can be considered for utilization towards export as opening balance for the subsequent quarter. Establishment of nexus between the input services and the export of services - HELD THAT - The Department has not initiated any proceedings for recovery of the irregular credit of input services under Rule 14 of the CENVAT Credit Rules, 2004 read with Section 73 of the Finance Act, 1994. Since availment of CENVAT credit has not been questioned at the material time, subsequent claim of refund under Rule 5 on fulfillment of conditions laid down therein cannot be questioned by the Department at a later stage for denying the refund benefit. The issue arising out of the present dispute is no more res integra in view of the decisions of the Tribunal in the case of NESS TECHNOLOGIES (INDIA) PRIVATE LIMITED VERSUS COMMISSIONER OF SERVICE TAX DIVISIONV, MUMBAI 2015 (11) TMI 53 - CESTAT MUMBAI , ACCELEYA KALE SOLUTIONS LTD. VERSUS COMMISSIONER, CGST, THANE 2018 (7) TMI 1217 - CESTAT MUMBAI passed in the case of M/S. TPG CAPITAL INDIA PVT. LTD. VERSUS COMMISSIONER OF CGST, MUMBAI. 2019 (9) TMI 1592 - CESTAT MUMBAI passed in the case of M/S M. NET PARTNER TECHNOLOGIES PVT. LTD. VERSUS COMMISSIONER OF C.G. ST, MUMBAI EAST 2020 (1) TMI 73 - CESTAT MUMBAI . The ratio laid down in the said orders of the Tribunal is to the effect that while granting the refund benefit under Rule 5 ibid read with the notification issued thereunder, the Department cannot object to such claim of the assessee on the ground that there was no nexus between the input services and exportation of the output service. There are no merits in the impugned order, insofar as the Commissioner (Appeals) has denied the refund benefit to the appellant - appeal allowed.

Summary

Issues:
Refund application rejection based on opening balance in CENVAT register and nexus between input services and output services.

Analysis:
The appeal challenged the order rejecting the refund application under Rule 5 of the CENVAT Credit Rules, 2004. The Commissioner (Appeals) denied the refund citing that the opening balance in the CENVAT register should not be considered for refund and certain input services lacked nexus with the output services provided by the appellant.

Regarding the opening balance issue, reference was made to Circular No. 120/01/2010 clarifying that the closing balance of the previous quarter can be utilized as the opening balance for the subsequent quarter for export purposes. The circular emphasized the continuity of credit utilization across quarters for exporters, even if no exports were made in a specific quarter.

On the nexus between input services and export of services, it was noted that the Department did not challenge the CENVAT credit availed by the appellant at the material time. The Tribunal cited previous decisions to establish that the Department cannot question the refund claim based on the nexus between input and output services if the credit availed was not disputed initially. The Tribunal referred to specific cases to support this principle.

Consequently, the Tribunal found no merit in the Commissioner (Appeals) decision to deny the refund benefit. The impugned order was set aside, and the appeal was allowed in favor of the appellant with consequential benefits, adhering to the law. The judgment was dictated and pronounced in open court by the Member (Judicial) of the Appellate Tribunal CESTAT Mumbai.