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2023 (9) TMI 455 - AT - Service TaxRefund of CENVAT Credit - Information Technology Software Services (ITSS) and Business Support Services (BSS) - export of taxable services - rejection on the ground that it was not providing any taxable service for which they are not eligible for refund of CENVAT Credit allegedly used for export of non-taxable services - HELD THAT - The said two services namely ITSS and BSS which are reflected in the ST-3 returns including sample returns annexed at page 109 and 112 of the appeal memo are taxable services and only because of the benefits of Notification No. 09/2005-ST was availed by the Appellant that provided exemption for export of services, Service Tax was not payable - However, it was held by Hon'ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX 2011 (9) TMI 450 - KARNATAKA HIGH COURT that CENVAT Credit is available though the export of service is not a taxable service. Further, the findings of the Commissioner (Appeals) that Appellant s case fits into the ratio of LALLY AUTOMOBILES PVT. LTD. VERSUS COMMISSIONER (ADJUDICATION) , CENTRAL EXCISE 2018 (7) TMI 1679 - DELHI HIGH COURT is untenable since it was passed in respect of trading which is not at all a service as per Article 366(29A) of the Constitution of India and, therefore, considered as exempted from Service Tax purview. The other ground of rejection of refunds relates to the description contained in the invoices which are admittedly in short forms which is not at all tenable for the reason that neither any query was made during personal hearing to find out the full forms of those descriptions given in the invoices nor the kind of services rendered in the service agreement was tallied with to ascertain the truth - Be that as it may, it is a settled position of law after pronouncement of the mPortal India Wireless Solution Private Limited judgment that export of software services even if not considered as taxable services, the exporter shall be entitled to get refund of CENVAT Credit which cannot even be denied on limitation ground apart from the fact that attempt for re-classification at the time of deciding on the refund application without a show-cause notice demanding duty followed by a proper adjudication process is untenable in law. The services rendered by the Appellant are defined as taxable services under 65(105) of the Finance Act, 1994 but for the purpose of export only they were allowed to export the same without payment of Service Tax but that by itself would not put the services under the category of unentitled service, so as to deny CENVAT Credit and consequential refund to the Appellant. Appellants are entitled to get refund of Rs.6,84,91,885/- Rs.13,00,32,070/- with applicable interest and the Respondent-Department is directed to pay the same within three months of receipt of this order - Appeal allowed.
Issues involved:
The rejection of refunds for multiple quarters by the Refund Sanctioning Authority, Commissioner (Appeals), and Adjudicating Authority is challenged in this appeal. Issue 1: Refund of accumulated CENVAT Credits for export of services The Appellant, a company providing IT Software Services and Business Support Services to foreign group companies, sought refund of unutilized CENVAT Credits under Rule 5 of the CENVAT Credit Rules, 2004. The Appellant contended that the services provided qualified as export of services, necessitating the refund applications for each quarter. The dispute arose when the authorities rejected the refunds, citing various grounds. Issue 2: Eligibility for refund under CENVAT Credit Rules The Commissioner (Appeals) rejected the appeal primarily on the grounds that Rule 6(1) of the CENVAT Credit Rules prohibits availing credit for exempt goods/services. It was argued that the Appellant did not render specific taxable services as required for refund under Rule 5. The dispute also centered on the description of services in export invoices and the applicability of relevant legal provisions. Issue 3: Legal interpretation and precedent cases The Appellant argued that despite export services not being taxable, CENVAT Credit cannot be denied, citing precedents like mPortal India Wireless Solution Pvt. Ltd. The Appellant contended that re-classification of services without due process is unsustainable. The Respondent highlighted restrictions under Export of Service Rules and Notification No. 05/2006-CE (NT) for refund eligibility. Judgment Summary: The Tribunal held that the Appellant's ITSS and BSS services were taxable, and the benefits of exemption led to non-payment of Service Tax. Citing legal precedents, the Tribunal emphasized that even non-taxable services could warrant CENVAT Credit refund. The rejection based on invoice descriptions was deemed unfounded, as no effort was made to verify the services rendered. The Tribunal emphasized that the export without tax payment does not equate to taxable services, affirming the Appellant's entitlement to CENVAT Credit refund. Consequently, the appeals were allowed, directing the Department to pay the refund amounts with interest within three months.
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