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TMI Blog2024 (4) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... have been adjusted against the amount available in the CENVAT credit as admissible credit. Non payment of some amounts towards due service tax liability cannot be reason for denial of CENVAT Credit or the refund under Rule 5. All operate under separate sphere and needs to be examined as per the parameters laid down as per law. Time Limitation - HELD THAT:- There are no merits in the impugned order in view of the decision of larger bench in case of CCE CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [ 2018 (2) TMI 946 - CESTAT BANGALORE] where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. Penalty - HELD THAT:- As the demand made in the orders of the lower authorities is not sustainable, the penalty imposed also is set aside. There are no merits in the impugned order on any count - appeal allowed. - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Balram Pandey, Chartered Accountant for the Appellants Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo Thousand Seven Hundred and Fifty Seven Only)wrongly taken by the party on ineligible input services, on the grounds as discussed above, I also order for the recovery of the said amount from the party under Rule 14 of the Cenvat Credit Rule 2004 read with Section 73 of the Finance Act, 1994, along with the due amount of interest liable thereon. 3. I impose a penalty of Rs 3,02,757/- (Rs. Three Lakh Two Thousand Seven Hundred and Fifty Seven Only)on the party under Section 78 of the Finance Act, 1994, for violation of the provisions of Rule 5 of CENVAT Credit Rules, 2004 read with Notification No 5/2006-CE (NT) dated 14.03.2006. All the above mentioned dues may be paid by the party forthwith. 1.4 Order in Original No R-296/DC/DIV- III/ST/NOIDA/2016-17 dated 31.03.2017: Order 1. I hereby reject the refund claim for Rs 7,18,402/- (Rs. Seven Lakh Eighteen Thousand Four Hundred and Two Only) submitted by the party under section 11B of the Central Excise Act, 1944. 2. I also disallowed the Cenvat Credit of above mentioned amount of Rs 7,18,402/- (Rs. Seven Lakh Eighteen Thousand Four Hundred and Two Only) wrongly taken by the party on ineligible input services, on the grounds as discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have discharged his service tax liability properly and correctly, there would not have been any accumulated cenvat credit for claiming refund. 2.4 Accordingly the appellant was issued SCNs proposing rejection of the four refund claims in terms of Rule 5 of CCR 04 read with Notification No. 5/2006-C.E. (N.T.) dated 14/03/2006. 2.5 The show cause notices were adjudicated by the original authority as per the order in original referred in para 1.2 2.6 Being aggrieved by the above orders, the appellant filed four appeals as detailed in table para 1 above, which have been dismissed as per the impugned order. 2.7 Aggrieved appellant has filed these appeals. 3.1 I have Shri Balram Pandey Chartered Accountant for the appellant and Shri Manish Raj Authorized Representative for the revenue. 3.2 Arguing for the appellant learned chartered accountant submitted that: Impugned order travels beyond the show cause notice hence bad in law. SEZ provisions are not applicable to STPI units. No show caue notice has been issued demanding the service tax. There is no service provider and service recipient relationship between them and their employees. No service tax can be levied on the payments made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... located in SEZ receiving special consideration with regard to exemption, drawback and other concessions Goods supplied inter se $EZ unit and DTA unit of same assessee, considered as import or export - Rule 19(7) of SEZ Rules, 2006 clearly providing for separate distinct entity in the separate books of account, etc., for two units of same assessee located in SEZ and DTA respectively ⁃ Thus, notwithstanding a common legal entity, unit situated in SEZ, distinct in identity than another unit of same assessee situated in DTA - Principle of Mutuality not applicable and Service Tax leviable on supply of taxable services by SEZ unit to DTA unit if supplied for consideration.- Rule 19(7) of Special Economic Zones Rules, 2006 Section 66A of Finance Act, 1994. 6.3 All these statutory provisions indicate separate and also artificially created independent existence of a SEZ/STPI unit of a company whether it has another unit situated in DTA or not. In particular, Rule 19(7) of the SEZ Rules, 2006 while recognising that the same legal entity may have two units, one in SEZ/STPI and another in DTA, mandates that the two would have distinct identities with separate books of acedunt. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the appellant intentionally misused the provisions of SEZ/STPI scheme with intent to evade payment of service tax by syphoning the tax benefits available exclusively to an EOU/SEZ/STPI unit to non-entitled DTA units, in the disguise of provisioning self-services by his STPI unit to his DTA units and correctly concluded that if service tax was discharged/paid on such service consideration received under the cover of salary/other allowances by the appellant, no credit would be accumulated in the appellant s cenvat credit account and therefore held that no refund under Rule 5 of CCR 04 is payable to the appellant. For the same reason the adjudicating authority correctly denied the cenvat credit, confirmed the demand and ordered for recovery of the same under Rule 14 of the CCR 04 read-with Section 73 of the Finance Act 1994 with due amount of interest leviable thereon. The adjudicating authority also correctly imposed penalty under Section 78 of the Finance Act 1994 for such wilful violation and misuse of provisions of SEZ/STPI scheme and also of Rule 5 of CCR 04 with intent to evade payment of service tax. In the facts and circumstances of the case read- with discussions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the value of Services provided by them in the Domestic Tariff Area i.e. to their manufacturing units situated at Kolkata and Baddi or Not. The party in their defence reply have stated that taxable Services means any service provided or to be provided to any person by any other person in relation to Information Technology Software Service. The party further stated that this legal position indicates that there must be a service provider and receiver of the service. In the instant case the provider and the receiver of the service are one and the same entity, entity itself. Since in the instant case receiver Provider of services are the same entity, there cannot be any provision of service as Contemplated in the law Therefore, in the instant case, no service tax liability on self service will arise. The party has also relied upon various Judgments as mentioned herein above. I have thoroughly examined the issue and found that the citations (case laws) as quoted by the party in their defence are not applicable in this case as the facts circumstances of this case are quite different to these cases as cited by the party. In the instant case, the party is 100% EOU where is in the cases q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the party in their defence reply have not disclosed the date (s) of payment not have adduced any proof evidence therefore with respect to the disputed amount. So, on this, basis, the period of one year cannot be determined and date of invoices/bills of the input services will be taken for computing the period of one year Secondly, the party has also stated in their defence reply that as per the provisions of Notification No.27/2012 CE (NT) dated. 18.06.2012, the manufacture or the service provider of output service shall submit not more than one claim for every quarter. Therefore, the period of year should be counted from the last date of the quarter 30.06.2010 in this case. It is very pertinent to note here that the provisions of section 11 B ibid and that of notification No. 27/2012-CE(NT) dated. 8.06.2012 cannot be read in isolation, it is settled law that the rules or the notification cannot over side the provisions of basic Act. In fact, the Rules are referred or the Notifications are issued under the basic act. Therefore, the provision of Notification No.27/2012 CE(NT) dated 18.06.2012 should be read within the framework of section 11 ibid and not beyond that. Therefore, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Act, 1994. However in a novel manner the refund of accumulated cenvat credit has been rejected, for the reason of nonpayment of service tax on these amounts received by the appellant from their DTA units. Further the demand in respect of the amount claimed as refund has been confirmed against the appellant and equal penalties imposed. Thus against the total amount of service tax of Rs 1,22,02,050/- which as per the show cause notice and order in original was not paid by the appellant the demand is made equivalent to the amount claimed as refund along with equivalent penalties. The details of the demands made is as indicated in table below: Order-in-Original No. Period Involved. Amount in Rs Service Tax Penalty R-294/DC/DIV- III/ST/NOIDA/2016-17 January 2010 to March 2010 3,44,879 3,44,879 R-295/DC/DIV- III/ST/NOIDA/2016-17 October 2009 to December 2009 3,02,757 3,02,757 R-296/DC/DIV- III/ST/NOIDA/2016-17 April 2010 to June 2010 7,18,402 7,18,402 R-293/DC/DIV- III/ST/NOIDA/2016-17 July 2010 to September 2010 20,32,043 20,32,043 It is also interesting to note that instead of confirming the demand of the service tax, due adjudicating authority not only denied the refund claim mad u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims for such refunds once in a quarter and in respect of 100% EOUs, once in a month. The issue referred to Larger Bench is whether the time limit prescribed under Section 11B in respect of filing of refund claims is to be applied from the date of receipt of payment for export of services or can be considered from the end of the quarter in which such payments have been received. 10. After considering the provisions of the notifications issued under Rule 5 of the CCR, we note that there is a specific condition that the refund claims are required to be filed within the period specified under Section 11B. Consequently, we are of the view that completely ignoring the provisions of Section 11B may not be appropriate. This view is supported by the decision of Hon ble Madras High Court in the case of GTN Engineering (supra) wherein Hon ble High Court has disagreed with the view expressed by Hon ble Karnataka High Court in the case of mPortal (supra) that Section 11B will have no application with respect to refund under Rule 5 of CCR. 11. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consultancy services . As the entire taxable services rendered by the appellant for exporting outside India and on account of appellant not having any domestic service tax liability, the input service credit availed by it on the taxable input services, received by it remained unutilized. Hence, appellant sought for refund of this unutilized input credit under Rule 5 of CENVAT Credit Rules, 2004 by submitting 16 refund claims. Said applications came to be rejected as not having been filed within the limitation prescribed under Section 11B of the Central Excise Act. While answering substantial questions of law (1), (3) (4) hereinabove, we have already held that provisions of Section 11B of Central Excise Act would be applicable though Section 11B of the Act does not cover refund of Cenvat credit, Notification No. 5/2006 makes it explicitly clear that for the purpose of relevant date for computing one year prescribed under Section 11B, it has to be determined by applying Rule 5 of Cenvat Credit Rules, 2004, necessarily the refund claims ought to have been filed within one year from the relevant date as specified in Section 11B. In other words, time-limit has to be computed from the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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