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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 ..... s satisfied there are no reason as to why the CENVAT Credit on this account could have been denied - 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. Refund claim denied/modified on the ground that invoices have been issued in unregistered premises - HELD THAT:- The refunds could not have been modified/denied placing reliance on M/S RAAJ KHOSLA CO. PVT. LTD. VERSUS CST, DELHI [ 2008 (7) TMI 122 - CESTAT NEW DELHI] where it was held that 'We find the registration certificate was subsequently amended included the address mentioned in the invoices with retrospective effect. In these circumstances, order whereby credit was disallowed on this ground is set aside and the appeal of the appellant in this regard are allowed.' Cenvat Credit has been sought to be denied on various ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 accumulated CENVAT Credit during the quarter as provided by Rule 5 of CENVAT Credit Rules. 2.3 These refund claims were partly allowed and partly rejected as per the order in originals referred in table in para 1 above. 2.4 These orders were challenged by the appellant before the Commissioner (Appeals) who vide his Order-In-Appeal have disposed of the appeals filed by appellant modifying the refund orders. 2.5 Aggrieved by the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddress 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 been used in the export of goods. In the case of refund under Rule 5, (i) so far as the nature of the service which has been received by the exporter can be ascertained; (ii) tax paid therein is clearly mentioned; and (iii) other details as required under rule 4(a) are mentioned, the refund should be allowed if the input service has a nexus with the service/goods exported as discussed earlier. In any case, the suggested Chartered Accountant s certificate should clearly bring o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) . . . 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 various services by the impugned order holding the services to be ineligible as input services in terms of Rule 2 (l) of the CENVAT Credit Rules, 2004. However, except in respect of appeal No 70016/2021, impugned order does not specify the services in respect of which the credit is sought to be denied. Even in the said impugned order credit has been allowed in respect of all the services except for management, maintenance repair services and hospitality services. 4.8 The next issue that needs to be considered is with regards to establishment of nexus be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplified 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 observed therein stating as follows : 4. However, it is seen that no objection was raised by the revenue at the time of availing of credit. Rule 5 allows refund of accumulated credit and at the time of grant of refund, the Revenue is not permitted to examine the availability of the CENVAT credit. Such an exercise was required to be adopted by the Revenue at the time of availment of credit, by way of initiation of separate proceedings. Having not done that, it is not permissible to raise the objection at the time of grant of refund in terms of the said rule. The reliance b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reason, where such credit adjustment is not possible, a service provider is allowed for refund of such credit amount, subject to fulfilment of the conditions and limitations, as may be specified by the Central Government by way of issuance of notification. Such refund provisions are governed under Rule 5 ibid. In this case, the Central Government has issued the Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006, providing the procedure for grant of refund of input or input service used in providing output service, which has been exported without payment of service tax. The condition No. 5 in the said n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 refund application alone should be processed and settled by the department and the aspect of direct nexus or correlation between the input service and output service should not be looked into for such purpose. Therefore, we do not find any merits in the impugned orders, insofar as the refund benefit was denied to the appellant on the ground of non-establishment of direct nexus between the input services and the output service exported by it. 9 . On careful examination of various notifications (supra) issued by the Central Government, it reveals that based on the prescribed formula, the refund application has to be filled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lour 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 been denied on the ground that Service Tax has been charged on the buffet dinner, mineral water also and such Service Tax credit cannot be allowed in Cenvat Credit Rules, 2004. Learned Commissioner (Appeals) has not said anything other than this. In the case of Ultratech Cement Ltd. reported in 2010 (260) E.L.T. 369 (Bom.) Hon ble High Court of Bombay allowed the credit of Service Tax in respect of outdoor catering service and took the view that outdoor caterer service has a nexus or integral connection with the manufacture of final product. The view taken is that for benefit of cenvat credit in respect of input services, such services should be relatab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 services which are subject matter of Appeal No 70016/2021 and credit has been held admissible. Only services which are not covered by the said appeal are Membership Fee and Manpower Recruitment and Supply Agency Services. However I find that in case of XILINX India Tech. Services Pvt. Ltd [2016 (44) S.T.R. 635 (Tri. - Hyd.)] Hyderabad Bench has considered all the services which are in dispute in these set of appeals and have held as follows: 4. In this regard, it is found as follows :- i. Air Travel Agent s Services : While conceding that this service is an eligible input service for exporting the taxable output service, the lower authority has disallowed refund of the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining 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 credit on this input service has been disallowed by the lower authority on the ground that absence of any evidence of its usage for business purpose. The appellant has adverted that the courier services are required for sending documents to their customers/vendors which is an integral part of their business. They have further adverted that they do not provide courier service to their employees and that same are exclusively used by them to send business documents only. In this age of tight schedules, it cannot be said that courier services are not required by trade and industry for quick relay of documents etc. I, therefore, find and hold that this would also therefore has to be necessarily considered as an input servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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 connection with the accounting, payroll, tax and regulatory services rendered by the management consultants and other professions. I find merits in the submission of the appellant. These services are very much required to enhance efficiency and productivity of the organization and to ensure compliance with tax and regulatory requirements. I, therefore, hold that the denial of the refund for this input service is not justifiable. x. Manpower Recruitment or Supply Agency s Services The lower authority while conceding the eligibility of this input service both for taking credit and refund thereof, has however disallowed an amount of Rs. 2,47,860/- ; no reasons have been adduced for the denial. The appellant has adverted that the impugned services are received in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the considered opinion that the service of renting of fitouts availed by the appellant passes the test of an input service for providing an output service as envisaged in Rule 2(l) of the Cenvat Credit Rules, 2004, as amended w.e.f. 1-4-2011. xii. Internet/Telecommunication Services The lower authority has disallowed part of the refund claim in respect of this service on the ground that the invoice copy submitted by the appellant did not reflect whether of the calls of business purpose. The appellant has adverted that these are the internet, tele-conference facilities, telephone connections and mobile phone facilities are required in order to export the software services electronically, communicate with the customers and the vendors and hence are essential for the functioning/bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 challan issued under RCM after the period for which the refund claim was filed. 4.18 In respect of the first issue the matter has been elaborately discussed in appeal No 70016 70014 of 2021 in preceding paragraphs and I have concluded that the credit/ refund is admissible in respect of these services. 4.19 Refund has been denied/modified on the ground that credit of service tax paid under reverse charge in July 2014 cannot be claimed during April-June, 2014 quarter. The view taken in the impugned order cannot be sustained in view of the decision of Mumbai Bench in case of WNS Global Services Pvt. Ltd [2023 (73) G.S.T.L. 77 (Tri. - Mumbai)] holding as follows: 6. .. .. On Service Tax paid under Reverse Charge Mechanism on the very next month of the quarter in which service was taken, we find force in the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme. 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 been amended vide Notification No. 7/2010-C.E. (N.T.), dated 27-2-2010. This mainly deals with the procedure that needs to be adopted in case of the new refund claims. However, to resolve the disputes arising on account of the wordings/illustration provided in the notification, the same is being amended retrospectively (w.e.f. 14-3- 2006) (Clause 73 of the Finance Bill, 2010 refers) so as to resolve the disputes in respect of pending cases as well. Therefore to visualize the entire revamped and simplified refund scheme, both the amending notification and the Finance Bill provision must be read in conjunction. A note on the issue is enclosed as Annexure C. Refund of accumulated CENVAT credit to exporters: Amendments in Notification No. 5/2006-C.E. (N.T.) (3) To give legal backing to the above said circular, leading to faster and fair settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). That this being the case, the respondent/assessee is not barred from taking credit in terms of Rule 9(1)(bb) for the reason that Rule 9(1)(bb) bars the availment of credit when the service tax is paid pursuant to the notice issued alleging fraud, suppression of facts and wilful misstatement. On perusing the relevant paragraphs and the discussions made by Commissioner (Appeals), I am in full agreement with the view taken by him. Section 73(4A) does not make any mention about fraud, suppression of facts or wilful misstatement. The department cannot read words into the provisions of statute. 4.21 Thus in view of discussions as above I do not find any merits in the impugned order on either of the issues. Service Tax Appeal No.70017 of 2020 4.22 As per para 5.1 of the impugned order following issues have been flagged for consideration: Invoices issued in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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