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TMI Blog2013 (7) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... the service classified as "manpower recruitment or supply agency service" from abroad - the classification of the output services exported by the assessee has got to be done with reference to the entry (under Section 65(105) of the Act) claimed by the assessee and any particular rival entry invoked by the Revenue. - the dispute involved in the Department's appeal also has to be remanded for de novo adjudication. - ST/552/2009,ST/1140/2010 & ST/754,1701,3275,3362,336311722390/2012 - FINAL ORDER NO.25300-25308/2013 - Dated:- 30-5-2013 - P G Chacko And B S V Murthy, JJ. For the Appellants : Mr N Venkataram, Sr. Adv., Mr. K Krishnamurthy, Consultant and Mr Abhishek A Rastogi, Adv. For the Respondents : Mr PRV Ramanan, Special Consultant and Mr R K Singla, Commr (AR) Per: P G Chacko: Appeal No.ST/552/2009 filed by the Department, appeal No.ST/1140/2010 filed by M/s. HSBC Electronic Data Processing (I) Pvt. Ltd. and the stay applications filed by the said company in their appeals viz. ST/754, 1172, 1701, 2390 3275/2012 came up for hearing on 21/03/2013. The stay applications filed by the company in two other appeals viz. ST/3362 3363/2012, which did not figure i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt. 15/05/2012 No.219 220/2012 (H-IV) S.Tax. dt. 23/08/2012 7. ST/3363/2012 -do- 07/2011 to 09/2011 No.64-R/2012 dt. 06/06/2012 -do- The particulars of the two appeals in the second category are tabulated below: Sl.No. Appeal No. Appellant Period of dispute OIO No. Result 1 ST/1172/2012 HSBC EDP (I) Pvt. Ltd. 2005-06 to 2009-10 No.6/2012 dt. 31/12/2012 Rs.22,82,07,695/-demanded in terms of Section 66A for the period from 05-06 to 09-10. 2 ST/2390/2012 -do- 04/2010 to 03/2011 No.23/2012 dt. 28/05/2012 CENVAT credit of Rs.31,11,64,771/-entirely denied. 3. M/s. HSBC Electronic Data Processing (I) Pvt. Ltd., hereinafter referred to as the assessee, commenced their operations at Delhi, Hyderabad, Visakhapatnam, Bangalore and Kolkata in June 2001 as 100% Export-Oriented Units(EOUs) registered with the respective Software Technology Parks of India (STPIs). HSBC group is said to be one of the largest banking and financial services groups in the world. It is said to have outsourc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all part of such credit was utilized for payment of service tax on domestic output services, a major portion of the CENVAT credit remained unutilized. 5.1. Refund of such CENVAT credit which remained unutilized from December 2005 was claimed by the assessee from time to time under Rule 5 of the CENVAT Credit Rules(CCR) 2004 read with Notification No.5/2006-CE(NT) dt. 14/03/2006. The assessee thus claimed refund of a total amount of Rs.11006,60,464/-which has the following break-up: Sl.No. Appeal No. Period Refund claimed 1. ST/552/2009 12/2005 to 3/2008 Rs.25,61.75,161/- 2. ST/1140/2010 4/2008 to 6/2008 Rs.5,30,31,404/- 3. ST/754/2012 7/2008 to 3/2010 Rs.41,67,13,899/- 4. ST/1701/2012 4/2010 to 9/2010 Rs.13,84,05,558/- 5. ST/3275/2012 10/2010 to 3/2011 Rs.14,80,25,265/- 6. ST/3362/2012 4/2011 to 6/2011 Rs. 3,73,99,033/- 7. ST/3363/2012 7/2011 to 9/2011 Rs.5,09,10,144/- 5.2 The refund claim for the period 12/2005 to 3/2008 was rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice also demanded interest on the aforesaid amounts under Section 75 of the Act besides proposing penalties under Sections 76 to 78 of the Act. These demands/proposals were contested by the assessee on numerous grounds. in adjudication of the dispute, the Commissioner confirmed demand of service tax to the extent of Rs.22,82,07,695/-on the services found to have been received by the assessee from abroad during the period 2005-06 to 2009-10 and also ordered for payment of interest thereon, He also imposed penalty equal to service tax on the assessee under Section 78 and a separate penalty on them under Section 76. However, the learned Commissioner dropped the proposal for recovery of an amount equal to the CENVAT credit which was alleged in the show-cause notice to have been irregularly availed by the assessee on input services. He did so in view of the rejection, by the original and first appellate authorities, of the assessee's claim for refund of the unutilized CENVAT credit. The adverse part of the appellate Commissioner's decision has been challenged by the assesses in appeal No.ST/1172/2012. The Commissioner's decision favourable to the party has not been challenged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lower appellate authority. The Circular intended to allow refund of CENVAT credit and did not require one-to-one correlation between input service and output service. f. The assessee consistently classified their output services under BAS inasmuch as the contractual arrangement between them, HGRL, the Business Partners and their banking customers always remained the same during the entire period of litigation (December 2005 to September 2011). But the Department was not consistent in classifying the services. For the period from December 2005 to June 2008, they classified the services under Information Technology Service (ITS) which was excluded from BAS till 16/05/2008. For the period from July 2008 to September 2010, the Department was agreeable for classification of the services under the head "operational or administrative assistance in any manner" which expression was inserted in the definition of BSS from 01/05/2011 only. However, post-01/05/2011 when the services were classifiable under BSS as per the Department's own view, they were not so-classified but held to be not taxable under BAS. Thus the classification of the services was changed arbitrarily by the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee would not fall under BAS and consequently the same were not taxable services and, for this reason, no refund of unutilized CENVAT credit taken on input services could be validly claimed. e. The reliance placed by the learned Commissioner(Appeals) on Commissioner Vs. Deloitte Tax Services India Pvt. Ltd. is inappropriate inasmuch as the services rendered by the assessee in the instant case were in relation to computer systems and the coverage of the services rendered by Deloitte under BAS was not examined with specific reference to the various clauses of the definition of BAS. f. In the instant case, all the exports were made under "SOFTEX" forms which would imply that the services rendered by the assessee were transmitted through communication links and no mediawise export clearances were involved. The assessee had themselves declared in the "SOFTEX" forms filed with the STP! that they were sellers of software and that such software had been developed and exported via authorized and legitimate datacom Sinks. The export clearance letters issued by the STPI also clearly referred to the assessee's activity as export of software. These software exports as ITS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the nexus between the input services and the output services. The learned Commissioner(Appeals) chose to remand the cases to the lower authorities for de novo adjudication. As rightly submitted by the learned senior counsel for the assessee, it was not open to the appellate authority to do so inasmuch as he did not have the power of remand. All the relevant documents including the various agreements referred to by the learned counsel were available to the appellate authority which should have examined the documents for ascertaining the correct nature of the output services provided by the assessee. The orders passed by the learned Commissioner(Appeals) remanding the cases to the lower authorities for de novo adjudication are contrary to the statutory scheme and hence require to be set aside. 11. We have also found that the assessee has consistently claimed that their output services were classifiable under BAS in terms of clause (iii) or clause (vi) or clause (vii) of the definition under Section 65(19) of the Finance Act 1994 and has accordingly obtained registration with the Department. However, the stand taken by the Department regarding the nature of the services exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have the occasion to determine any such nexus as they found the output services to be non-taxable. Further, where a nexus is found between the input services and the output services, the amount of CENVAT credit to be refunded to the assessee will have to be determined in accordance with the procedure laid down by the Board in Circular No.120/1/2010 dt. 19/01/2010. On the facts of the present case, therefore, the entire exercise including determination of the nature of output service and its classification, determination of nexus between input service and output service and quantification of refund has to be undertaken at the original level. Therefore, the cases require to be remanded to the adjudicating authorities concerned for de novo adjudication. 13. In one case(ST/2390/2012), CENVAT credit was denied to the assessee in view of rejection of the relevant refund claim. This would mean that any decision on the refund claim will have a bearing on the admissibility of CENVAT credit to the assessee. Therefore the case against denial of CENVAT credit on input services also has to be remanded to the adjudicating authority concerned. 14. Appeal No.ST/1172/2012 filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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