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TMI Blog2021 (11) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... export of legal services and becomes eligible for refund in terms of Rule 5 of CCR and Notification no. 27/2012-CE(NT) dated 18.06.2012 - The ld. Commissioner (Appeals) has also referred to Rule 6 of CCR to maintain his stand that when a service is exempt from tax input credit cannot be allowed. However, sub-section (7) of the said Rule specifically excludes export of services from the relevant provisions of the Rule which disallow input credit. The necessity or otherwise for the appellants to get themselves registered under the Act is not pertinent to the issue. It may however be noted that the appellants have shown sufficient reason for taking registration and the Department had not raised any objection against it or against taking input credit all these years during which returns had also been filed regularly. There is no merit in the impugned orders - Appeal allowed - decided in favor of appellant. - S. T. Appeal Nos. 51910, 51911, 51912, 51913 & 52992 of 2016 - FINAL ORDER Nos. 51891 -51895/2021 - Dated:- 2-9-2021 - SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) AND SHRI C. J. MATHEW, MEMBER (TECHNICAL) Ms. Lalitha Krishnamurthy, Advocate for the appellant Ms. Neh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) for holding that the appellants are not eligible for refund are: (i) By virtue of Notification No. 30/2012-ST dated 20.06.2012, the appellants in their capacity as provider of legal services, was not required to pay any service tax on the services rendered by them and the recipient of the said services was responsible to discharge the service tax liability. (Para 7.1 of the impugned order) (ii) In terms of the definition of the term output service as given in Rule 2(p) of CENVAT Credit Rules, 2004, where the whole of service tax is liable to be paid by the recipient of service, as in the case of legal service, the same will not be included in the term output service as per Rule 2(p) of CENVAT Credit Rules, 2004 and hence appellant firm was not providing any taxable output service at all. (Para 7.2 of the impugned order) (iii) The appellant firm in their capacity as provider of legal services, were not liable to pay any service tax and hence the question of taking registration for the given purpose did not arise. (Para 7.3 of the impugned order) (iv) The CENVAT Credit scheme is basically meant to mitigate the cascading impact of tax. The basic pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... output services: If the legal services are provided to any person located outside the taxable territory. If the legal services are provided to any person other than a business entity . If the legal services are provided by a Body Corporate of Advocates. Therefore, contrary to the view of the ld. Commissioner (Appeals), not all legal services are excluded from the scope of output service . Export of legal services, inter alia, would be an output service. (iii) Registration and availment of credit are two separate and unrelated issues. The appellants, without prejudice, is statutorily obliged to take registration under Section 69 of Finance Act, 1994 read with Rule 4(1) of Service Tax Rules, 1994 as an importer of taxable services for subscription of legal magazines, legal database, fees paid to engage foreign Advocates (who cannot be enrolled with the BAR Council of India) and pay tax on import of their services. So contention of Department that assessee is not eligible for registration, because they are not required to pay any tax and hence not eligible to take CENVAT Credit is erroneous. And therefore, if registration is the sole criterion for taking CENVA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for refund of the CENVAT credit availed on the input services which could not be utilized, the Hon ble High Court of Karnataka in the case of MPortal India Wireless Solutions (P) Ltd. vs. CST, Bangalore [2011]-TIOL-928-HD-KAR-ST] has already held that the refund cannot be rejected on this ground. Therefore, the appeal has to be allowed as far as this ground is concerned. In 2012 (6) TMI 606 Zenta Pvt. Ltd. vs. CCE, Mumbai (CESTAT, Mumbai) it was held in para 4 of the order as Considering the submissions made by both the sides, we find that as per Rule 5 of the CENVAT Credit Rules, 2004, if the assessee is providing taxable service although they are exempt by way of notification, but have been exported, then the assessee is entitled to take input service credit. Same view was taken by this Tribunal in the case of Dell International Services India Pvt. Ltd. vs. Commissioner of Central Excise, Bangalore 2010 (17) STR 540 (Tri.Bang.) . In 2016 (2) TMI 475 Commissioner of Services Tax vs. HSBC Software Development (India) Pvt. Ltd. (CESTAT, Mumbai) it has been observed in para 7 of the order that export of taxes along with commodity or service, renders them unviable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Therefore, it can be said that the provider of service is located in taxable territory satisfying the main clause in the definition of output service under Rule 2(p) of CENVAT Credit Rules, 2004. Legal services provided by the appellant firm is not specified in the negative list of services under Section 66D of the Finance Act, 1994. Therefore, it can be said that the service does not fall in the first exclusion in the definition of output service under Rule 2(p) of CENVAT Credit Rules, 2004. The second exclusion in the definition of output service under Rule 2(p) of CENVAT Credit Rules, 2004 are of services, where whole of the service tax is liable to be paid by the recipient of service. 6.1 To determine the person liable to pay tax in the case of legal services, we need to refer to Rule 2(1)(d)(i)(D) of Service Tax Rules, 1994, the relevant extract of which is as under: (d) person liable for paying service tax ,- (i) in respect of the taxable services notified under sub-section (2) of section 68 of the Act, means,- (A) ....... (B) ....... (C) ....... (D) in relation to service provided or agreed to be provided by,- (I) ....... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 9 10 . 2. This notification shall come into force on the 1st day of July, 2012. [F.No.334/1/2012-TRU] 7. A perusal of the aforesaid Rule and the Notification makes it amply clear that only in the case of legal services provided by an individual Advocate or a Firm of Advocates to a business entity located in the taxable territory (emphasis supplied) the recipient is liable to pay the tax and consequently only those cases will fall outside the scope of output service . Legal services exported would fall within the scope of output service . 7.1 Even otherwise, in the case of exports in general, the recipient of the service is not liable to pay the tax and hence export services would be output services provided they are not in the Negative List. 7.2 Once it is established that the Appellants are providing output service they are entitled to take credit of input service. It is an admitted fact that credit proportionate to services provided wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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