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TMI Blog2024 (10) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 NOI-EXCUS-001-APP- 1645-19-20 dated 17.03.2020 74/R/AC/ CGST/D-I 19 dated 23.08.201 210884/- 10/2012 to 12/2012 4. ST/70017/ 2021 NOI-EXCUS-001-APP- 1646-19-20 dated 18.03.2020 63/R/AC/CGST/ D-I/2018-19 dated 09.08.2018 943100/- 01/2012 to 03/2012 5. ST/70018/ 2021 NOI-EXCUS-001-APP- 1647-19-20 dated 18.03.2020 87/R/AC/CGST/ D-I/2018-19 dated 12.09.2018 630542/- 01/2014 to 03/2014 1.2 By the impugned order Commissioner (Appeals) have rejected/partially allowed the appeals filed by the appellant, against the partial rejection of refund claims filed by the appellant under the Rule 5 of CENVAT Credit Rules, 2004. 1.3 As the issues are identical in nature I am taking up the issue for consideration first and in light of the decisions the appeals will be decided subsequently. 2.1 Appellant is an STPI unit having centralized service tax registration for providing the services classifiable under the category of Information Technology Software Services, Business Auxiliary Service and Management Consultancy Services etc. They were availing the benefit of CENVAT Credit in terms of CENVAT Credit Rules. 2.2 They filed refund claims claiming refund of accumulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice; Management, maintenance or repair services Telecommunications services Hospitality services Manpower recruitment services Membership fees Credit of service tax paid under reverse charge in July, 2014 cannot be claimed during Apr-June, 2014 quarter. Hence, refund of Rs. 6,03,561/- (out of total refund of Rs. 6,78,360/-) has been denied; 4.3 On the issues of denial of credit for the reason that invoices do not contain proper details such as address etc. it is relevant to note that Board has vide Circular No.120/01/2010-ST dated 19.01.2010 as referred as follows:- "3.4 Incomplete invoices [para 2(e) above]: In case of incomplete invoices, the department should take a liberal view in view of various judicial pronouncements by Courts. It had earlier been prescribed in circular No.106/09/2008-ST dated 11.12.2008 that the invoices/challans/bills should be complete in all respect. This circular was issued with reference to notification No.41/2007 dated 06.10.2007 as specific services eligible for refund under the notification has been specified. Thus, a stricter requirement exists under the said notification for ascertaining the actual service which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dha Nagar." Since appellant have centralized registration at NOIDA, the input credit in respect of the services received at Pune and Chennai gets reflected in the common cenvat credit account maintained at NOIDA and in the ST-3 return filed in NOIDA. By taking the credit against the invoices addressed to their premises at Pune and Chennai appellant have not contravened any provision of the Cenvat Credit Rules, 2004 for which the said credit could have been denied. 4.6 The next ground on which the refund claim has been denied/modified is that invoices have been issued in unregistered premises. This issue has also been settled by the Tribunal in various decisions referred to by the counsel for the appellant namely as under :- Ribbit Studios [(2023) 6 Centax 182 (Tri.-Bom)] ABM Knowledge Ltd. [2019 (27) G.S.T.L. 694 (Tri. - Mumbai)] Raaj Khosla & Co. Pvt. Ltd. [2008 (12) S.T.R. 627 (Tri. - Del.)] Curadev Pharma (P) Ltd. [2017 (7) G.S.T.L. 269 (All.)] Well Known Polyesters Ltd. [2011 (267) Ε.Ε.Τ. 221 (Tri. - Ahmd.)] In view of the above decisions as above refunds could not have been modified/denied. 4.7 Cenvat Credit has been sought to be denied on var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 2004, was substituted vide Notification No. 18/2012-C.E. (N.T.), dated 17-3-2012, with effect from 1-4-2012. The said substituted rule has prescribed the formula for claiming refund of service tax by the service provider. Under such amended rule in vogue, there is no requirement of satisfying the nexus between the input services and the output service provided by the service provider. Consequent upon substitution of the said Rule in the Union Budget - 2012, the Tax Research Unit (TRU) of CBEC vide letter dated 16-3-2012 has clarified as under :- "F.1. Simplified scheme for refunds : 1. A simplified scheme for refunds is being introduced by substituting the entire Rule 5 of Cenvat Credit Rules, 2004. The new scheme does not require the kind of correlation that is needed at present between exports and input services used in such exports. Duties or taxes paid on any goods or services that qualify as inputs or input services will be entitled to be refunded in the ratio of the export turnover to total turnover." " 4.5 Similar view has been expressed by the Tribunal in case of TPG Capital India Pvt. Ltd. [Final Order No. A/86651-86655/2019, dated 20- 9-2019]. Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andates for recovery of such irregularly availed credit from the service provider, in the manner prescribed under Section 73 of the Finance Act, 1994. The basic requirement for effecting recovery of the Cenvat credit under the said statutory provision is for initiation of show cause proceedings within the stipulated timeframe and thereafter, for adjudication of the dispute arising therefrom. In the present case, it is an undisputed fact on record that the department had not proceeded against the appellant for effecting recovery of the allegedly availed irregular Cenvat credit, by taking recourse to Rule 14 ibid read with Section 73 ibid. On the other hand, the department had raised the issue of non-establishment of nexus between the input services and exported output service for the first time, while adjudicating the subject refund claims filed under Rule 5 ibid by the appellant. 8.1 A service provider is permitted under the Cenvat statute to take credit on the input or input service used in output service, which is exported by it. The credit so taken by such type of service provider is allowed for utilisation for payment of service tax on the output service. However, for any rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is needed at present between exports and input services used in such exports. Duties or taxes paid on any goods or services that qualify as inputs or input services will be entitled to be refunded in the ratio of the export turnover to total turnover". 8.2 On a conjoint reading of the statutory provisions and the notifications issued by the Central Government from time to time, it transpires that input services may not necessarily be used directly in provision of the output service and use of such services 'in or in relation to' also meet the requirement of Rule 5 ibid for the purpose of refund benefit. While interpreting the expression 'in relation to' used in the statute, the Hon'ble Supreme Court in the case of Doypack Systems Pvt. Ltd. v. Union of India [1988 (36) E.L.T. 201 (S.C.)] has held that the said phrase is equivalent to or synonymous with 'pertaining to' and 'concerned with' and therefore, the said phrase has a very broad connotation and cannot be given a narrow meaning. In view of the settled position of law, there is no requirement of establishing one to one correlation between the input services and the output service. Based on adoption of prescribed formula, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Management Maintenance Rs 144620 Repair 4.11 By the impugned order CENVAT credit has been held admissible in respect of courier service, advertising service, Landscaping service , work contract services and has been denied on the Hospitality services and Management maintenance and Repair services. 4.12 So the issue that remains for consideration in this appeal is only in respect of Hospitality Services and Management maintenance and Repair Services. Also in respect of Hospitality Services appellant has withdrawn the claim to the extent of Rs 6791/- and hence the issue for consideration is in respect of the remaining amount. In case of Heubach Colour Pvt. Ltd. [2013 (32) S.T.R. 225 (Tri. - Ahmd.)] Ahmedabad Bench has observed as follows: "4. In this case Service Tax proposal is for denial of Service Tax credit on food and hospitality services rendered by hotel. It was submitted before the lower authorities that The Service Tax was paid for a buyers' delegation and conference. Further the learned counsel also submitted that the credit of Service Tax has been taken when food and hospitality services were received for providing lunch/dinner etc. to the customers. The credit has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Access Service, Port service, Maintenance and Repair Service, Consulting Engineer's service, Security Agency Service and Storage and Warehousing credit is admissible." In view of the above I do not find any merits in impugned order denying the credit in respect of these services. Service Tax Appeal No.70014 of 2020 4.14 As per para 5.1 of the impugned order following issues have been flagged for consideration: The appellant has availed input credit on some services which are not used for authorized operation and some of the services not covered under input service definition under Rule 2 (l) of CCR, 2004. Either the invoices are not addressed to the appellant or the address is not provided on the invoice Though some services are fit for taking credit but invoice is not proper i.e, either the address is not provided or addressed at Pune. 4.15 On the issue with regards to the deficiency in the invoice and the invoices being addressed to Pune, I do not find any merits in view of the observations made in para 4.3 to 4.5 above. Further in respect of services held to be ineligible as per Rule 2 (l) of CENVAT Credit Services, I find most of the services mentioned are the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services were received by them in connection with their audit and issue of certificate by practicing Chartered Accountant and that these services will fall under the ambit of activities like accounting and audit which form part of the inclusive portion of the definition of 'input service' at Rules 2(l) of the Cenvat Credit Rules, 2004. I find merit in the submissions of the appellant and in consequence, I hold that the denial of the refund for this input service is not justifiable. iv. Commercial Training or Coaching Services I find that the lower authority while conceding that the appellant is eligible for claiming refund on this service, has however disallowed an amount of Rs. 11,192/- with regard to training on communication skill and conference. The appellant has adverted that the input service in this case pertains to participation fees paid for attending business conference/seminar and business communication training services and that input services like coaching and training exhibition are part of input service. In the circumstances, I hold that the denial of the refund for this input service is therefore not justifiable. v. Courier Services The refund of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, Maintenance and Repair Services The lower authority has disallowed refund pertaining to premises related to maintenance, Xerox machine maintenance, Fire alarm maintenance etc. on the ground that same do not impact the quality of the output service. The appellant has adverted that these services are consumed essentially in relation to day-to-day function of the office including security, cleaning and housekeeping services and an indispensable services being directly connected to office premises. They have relied upon the ratio of Tribunal's order in the case of CCE v. CE Gloves India Ltd. [2013-TIOL- 1975-CESTAT-BANG.]. In the circumstances, I find merit in the above submission and I hold that the denial of the refund for this input service is not justifiable. ix. Management or Business Consultant's Services The lower authority while conceding that these services are covered under the definition of input service has however disallowed an amount of Rs. 2,00,295/- in respect of invoices on the ground that the related invoices were towards fees for statutory compliance and towards pay roll processing. The appellant has adverted that these services were used in connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s devoid of merit. In the instant case, I find that the appellants were a provider of output service under the category of Information Technology from their premises at Madhapur, Hyderabad. It is not disputed that the said output service was provided by the appellant from their said premises which had been leased out by them from M/s. Cyberpearl Information Technology Park Private Ltd., the lessor and the provider of both the services renting of immovable property service as well as the renting out of fitouts (interiors and improvements) as per the list of furniture and fittings attached in the Second Schedule to the Deed of Lease. There can be no dispute that the aforesaid fitouts are used by the Information Technology and Software Service providers such as this appellant for housing their employees and equipment, without which they cannot provide the export service - they set out to do. It is also noted that in this case, the service pertaining to renting of fitouts will have to be necessarily considered as a "naturally bundled services" with the service of renting of immovable property, for the purposes of Section 66F of the Finance Act, 1994. In view of the above, I am of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have a direct nexus. In any case, the said service finds place in the inclusive portion of the definition of input service. 3. In view of the above, I am of the opinion that the disputed input services as aforesaid, disallowed by the lower authorities, will merit consideration as input services for the purposes of Rule 2(l) of the Cenvat Credit Rules, 2004, as amended w.e.f. 1-4-2011 and that these services have clear nexus with the output service provided by the appellant and are very much used by them to provide the output service.Therefore, the appeal filed by the appellant is allowed with consequential reliefs, as per law." 4.16 Thus in view of the above I do not find any justification for denial of CENVAT credit or the refund claim in respect of these input services. Service Tax Appeal No.70015 of 2020 4.17 As per para 5.1 of the impugned order following issues have been flagged for consideration: Inadmissible credit availed by the appellant on the invoices not issued at registered address as per ST-2 and pertains to ineligible services i.e Works contract services, Hotel Services having no nexus with export of services Credit taken by the appellant on the abscess of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is eligible for refund in respect of credit availed for earlier period, the D.O.F. No. 334/1/2010-TRU, dated 26-2-2010 clarifies the same, and is reproduced as under: Refund of accumulated CENVAT credit to exporters: Amendments in Notification No. 5/2006-C.E. (N.T.) 8.1. "It may be recalled that a number of representations were received from exporters, especially the exporters of services regarding difficulties being faced in availing the benefit of refund of accumulated credit under the scheme prescribed under Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006, issued under rule 5 of the CENVAT Credit Rules, 2004. While certain issues germinated from the wordings used in the provisions of the notification or interpretation of such provisions, other issues were more in the nature of administrative difficulties in operating the scheme. As an immediate measure, CBEC issued a clarificatory circular No. 120/01/2010-S.T., dated 19-1-2010. It was however felt that a permanent solution would require supplementing the clarification with certain amendments to the notification, part of which had to be 'retrospective' in nature. Accordingly, Notification No. 5/2006- C.E. (N.T.) has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ratio of the export turnover to the total turnover of the claimant. Thus, if the CENVAT credit available to the exporter at the end of the quarter, or month, as the case may be, is Rs. 1 crore, and the ratio of export to total turnover during the quarter is 50%, then Rs. 50 lakh should be refunded to the exporter. The essence of the changes is that refund shall be available for all goods, or input services, on which CENVAT is permissible and should be processed accordingly. Further, refund of CENVAT should not be linked to CENVAT taken in a particular period only. 10. Following the decision in the above stated Final Order in the case of Hritik Exim v. CCE, Hyderabad, as well as the above Direct Order of the TRU, clarifying Circular No. 120/01/2010-S.T. and retrospective amendments made to Notification No. 5/2006-C.E. (N.T.), I hold that the refund claim is proper. 11. The second objection in respect of this belatedly paid service tax is that the credit is barred under Rule 9(1)(bb) of CENVAT Credit Rules, 2004. The Commissioner (Appeals) has discussed in detail in para 7 of the impugned order that the payment of service tax has been made by the respondent under Section 73(4A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty on the appellant. Though such a charge has been made in the show cause notice issued, Adjudicating Authority has not imposed penalty or demanded interest in any of these proceedings except in Service Tax Appeal No 70016 & 70017 of 2021. However as I do not find any merits in the impugned order to the in respect of the denial CENVAT credit in terms of Rule 14 of CENVAT Credit Rules, 2004 and consequent rejection of the refund claims made under Rule 5, ibid, I do not find any merits in demand for interest and penalty imposed, set aside the same. 4.27 In view of our findings recorded issue wise and on in respect of each of the appeals in paragraphs above, I do not find any merits in the impugned orders and set aside the same. The matters in respect of the refund claim are remanded back to the original authority for redetermination of amounts to be refunded to the appellant in terms of rule 5 of CENVAT Credit Rules, 2004 by holding that the disputed credit is admissible. 5.1 Appeals are allowed and the matter remanded to original authority for redetermination of amounts to be refunded to the appellant in terms of rule 5 of CENVAT Credit Rules, 2004. 5.2 As the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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