Custom, Excise & Service Tax Tribunal
Capgemini Technology Services India ... vs Bangalore Service Tax- I on 10 February, 2022
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Application(s) Involved:
ST/Additional Evidence/20557/2021
in
Service Tax Appeal No. 454 of 2010
Appeal(s) Involved:
Service Tax Appeal No. 454 of 2010
[Arising out of Order-in-Appeal No. 92/2009 dated 08/09/2009 passed
by the Commissioner of Central Tax (Appeals II), Bangalore]
Capgemini Technology Services
India Limited Appellant(s)
No.158-162 (P) to 170 (P), EPIP Phase II,
White Field Road, Bangalore
VERSUS
C.C.E & C.S.T.-Bangalore Service
Tax- I
1st To 5th Floor, TTMC Building,
Above BMTC Bus Stand, Domlur Respondent(s)
Bangalore - 560 071, Karnataka Appearance:
Shri Prasad Paranjape, Advocate for the Appellant Shri P. Gopakumar, Additional Commissioner (AR) for the Respondent CORAM:
HON'BLE SHRI P. ANJANI KUMAR, TECHNICAL MEMBER HON'BLE SHRI P. DINESHA, JUDICIAL MEMBER Final Order No. 20026 / 2022 Date of Hearing: 07/02/2022 Date of Decision:10/02/2022 Per : P. ANJANI KUMAR The appellants, Capgemini Technology Services India Limited (formerly known as iGate Global Solutions Limited) are engaged in ST/454/2010 export of services and are registered as a 100% Export Oriented Unit (Software Technology Park). The appellants have filed refund claim of Rs. 2,31,87,510/- (Rupees Two Crores Thirty One Lakhs Eighty Seven Thousand Five Hundred and Ten only) for the period April 2006 to April 2007 seeking refund of unutilized credit under Rule 5 of Cenvat Credit Rules read with Notification 05/2006-CE (NT) dated 14/03/2006. Revenue issued a show-cause notice to reject the refund on the ground that the appellant was engaged in export of non-taxable services i.e. Development of Computer Software; which was not qualifying as exports under Export of Services Rules, 2005. Order-in-Original dated 14/08/2008 was issued confirming the rejection and the same was upheld by Order-in-Appeal dated 08/09/2009.
2. The learned counsel for the appellants submits that under STPI Scheme, the appellants are entitled to cenvat credit of service tax paid on input services; the availment of cenvat credit was never objected by Revenue and has not challenged and credit having not been challenged cannot be denied at the stage of sanctioning of refund as held by CBEC Circular dated 120/01/2010-ST dated 19/01/2010 and which was following in the following cases:
a. Commr. of C.Ex., Delhi & Delhi-III Vs. Convergys India Services Pvt. Ltd. [2017 (48) S.T.R. 173 (Tri.-Chan.)] b. Microsoft Global Services Center (I) Pvt. Ltd. Vs. Commr. of Cus., C. Ex. & S.T., Hyderabad-IV [2021 (44) G.S.T.L. 264 (Tri.-Hyd.)] c. The Commissioner, Customs and Central Excise, Hyderabad-IV Vs. M/s. Qualcomm India Pvt. Ltd. [2021 (11) TMI 72 - Telangana High Court] 2.1. Learned counsel for the appellant further submits that there is no dispute about utilization of input services in the export services affected by the appellant. The refund cannot be rejected in view of the 2 ST/454/2010 ratio of the following cases:
a. mPortal India Wireless Solutions P. Ltd. Vs. C.S.T., Bangalore [2012 (27) S.T.R. 134 (Kar.)] b. Kpit Cummins Infosystems Ltd. Vs. Commissioner of C.Ex., Pune-I [2013 (32) S.T.R 356 (Tri.-Mumbai)] c. AXA Business Services Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore [2017 (49) S.T.R. 556 (Tri.- Bang.)] d. Repro India Ltd. Vs. Union of India [2009 (235) E.L.T. 614 (Bom.)] 2.2. Learned counsel also submits that the allegation in the show-cause notice that the refund is barred by limitation is incorrect in view of Karnataka High Court judgment in the case of Suretex Prophylactics India Pvt. Ltd. Vs. Commr. of C. Ex., Cus. & S.T., Bangalore [2020 (373) E.L.T. 481 (Kar.)] as the appellant has filed the refund within one year of the end of the relevant quarter. He also submits that though they have not specifically pleaded for grant of interest in view of the Board's Circular No. 398/31/98-CX dated 02/06/1998 and Circular No. 670/61/2002-CX dated 01/10/2002 and ratio of the following judgments interest on eligible refund is automatic.
a. Garden Silk Mills Ltd. V. Union of India [2016 (338) E.L.T. 670 (Bom.)] b. Qualcomm India Pvt. Ltd. Vs. Union of India [2021 (50) G.S.T.L. 269 (Bom.)] c. Sap Labs India Pvt. Ltd. Vs. Commr. of Central Tax, Bengaluru East [2021 (55) G.S.T.L. 297 (Tri.-Bang.)
3. Per contra, learned authorized representative appearing on behalf of the Revenue reiterates the findings of Order-in-Original and Order-in-Appeal and submits that the miscellaneous application filed by the appellants under Rule 10 of CESTAT Procedure Rules, 1992 is 3 ST/454/2010 incorrect; this ground cannot be an additional ground in terms of the said rule; additional relief cannot be equated to additional ground.
4. Heard both sides and perused the records of the case.
5. We find from the facts of the case that the appellant's claim that they rely on the following services:-
a. BPO and Call Centre Services b. IT Consultancy Services c. System Integration and Testing d. Software Development Service e. Software Maintenance Service 5.1. We also find that Department has not disputed the cenvat credit when the same was availed by the appellants. We find that learned Commissioner (Appeals) finds in the impugned order that the adjudicating authority has rightly rejected the refund claim on the ground that the Development of Software is not taxable under Clause (105) of Section 65 of the Finance Act, 1994 and cannot be treated as 'exports' made under Export of Services Rules, 2005. We find that similar issue has come before this Tribunal in the case of Kpit Cummins Infosystems Ltd. Vs. Commissioner of C.Ex., Pune-I [2013 (32) S.T.R 356 (Tri.-Mumbai)] this Bench has observed that -
"5.6 The appellant mPortal India Wireless Solutions P. Ltd. was also a 100% EOU and the transaction undertaken are also identical in the sense that they relate to export of software. Therefore, the above decision is squarely applicable to the facts of the case before us. In any case, the object of EXIM Policy of the Government of India is to promote exports of goods and services and not export of taxes. Service Tax being a destination based consumption tax, in the case of exports 4 ST/454/2010 there should not be any tax burden and the tax burden, if any, is to be imposed by the Government of the country where the services are consumed. Otherwise, it would render the exports of software uncompetitive. Keeping in view of above policy objective of the government, it is appropriate to hold that the appellants are eligible for the refund of the amount claimed by them of Rs. 2,14,45,060/- during the impugned period on account of export of exempted services subject to the satisfaction of other conditions prescribed in Notification No. 5/2006-C.E. (N.T), dated 14/03/2006 and the Revenue shall verify the same."
5.2. We also find that Tribunal has taken a similar view in AXA Business Services Pvt. Ltd. (supra) and Repro India Ltd. (supra). In view of the above, we find that the availment of credit is not contested by the Revenue and the appellants having exported the services cannot be disentitled to refund under Rule 5 on the ground that the exported services are exempt.
5.3. We further find that the appellants have filed a miscellaneous application for seeking interest on delayed payment in terms of Section 11BB of Central Excise Act, 1944. We find that Karnataka High Court in the case of Netapp India Pvt. Ltd. [2020 (32) G.S.T.L. 176 (Kar.) has held that -
"8. The Learned Counsel further contended that the manner of computation of interest is also settled in view of the decision of the Hon'ble Supreme Court in Ranbaxy Laboratories v. Union of India reported in 2011 (273) E.L.T. 3 (S.C.) wherein, the Hon'ble Supreme Court has declared that the liability of the Revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the three months period from the date on which the order of refund is made. There cannot be any quarrel over the quantum of refund in view of the orders of the Assistant Commissioner, Division C, Bengaluru. Therefore, the impugned order does not suffer from any irregularity or perversity.
9. The rival submissions are examined in the light of the decisions by the High Court of Gujarat as well as High Court of 5 ST/454/2010 Madras. The High Court of Gujarat in the case of Commissioner, Central Excise v. Reliance Industries Limited supra, while considering a similar canvas against the payment of interest on delayed refunds under Section 11BB of the Central Excise Act, in terms of the obligation to refund under Rule 5 of the Cenvat Credit Rules and Notification dated 18-6- 2012, did not accept the canvas on behalf of the Revenue that the scheme for refund of unutilized Cenvat credit is a special beneficial scheme with self contained procedure providing for the manner and method of its implementation, and hence any refund claimed under the Rules would be governed only by the provisions of the Scheme and the general provisions of Section 11BB of the Central Excise Act cannot be resorted to. The High Court of Gujarat concluded that the Cenvat credit is nothing but duty paid by the supplier of inputs which are dutiable goods manufactured by the supplier or dutiable services rendered by the service provider; when such goods/services are utilized for further manufacture or providing service, which are dutiable, the manufactured goods or service provided carry the duty paid by the supplier of inputs as a component of its price/value. Hence, the duty payable on the ultimately manufactured goods/ services rendered stands reduced to the extent of duty already paid on the inputs. Thus, the duty paid on inputs by the supplier has already been actually received by the exchequer. Therefore, there is a basic fallacy in the argument by the Revenue that refund of unutilized Cenvat credit is different from excess duty paid or collected as contemplated under Section 11B of the Act. As such, the High Court of Gujarat held that when there is delay in sanctioning the refund under Rule 5 of the Cenvat Credit Rules and Notification dated 18-6-2012, the provisions of Section 11BB of the Central Excise Act would be clearly attracted.
10. The High Court of Madras, which was considering allowing interest on the delayed refund of unutilized credit under the Modvat Credit Scheme, has also concluded that the Modvat credit taken was nothing but payment of duty which would be available to the assessee on the assessee paying duty on inputs at the time of clearance of final bills and therefore, there is statutory obligation on the part of the appellant- Revenue under Section 11BB of the Act to pay interest for the delayed refund of the duty.
11. The Learned Counsel for the appellant-Revenue is unable to persuade this Court to hold that the obligation to refund unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules and Notification dated 18-6-2012 is distinct and separate from the obligation under Section 11B of the Act in the light of the reasoning in the aforesaid decisions. This Court concurs with the reasons assigned in the aforesaid decisions to hold that the Revenue would be obliged to pay under interest for the delayed refund as contemplated under Section 11BB of the Act even for the delayed refund of the unutilized Cenvat credit under Rule 5 of the Cenvat Credit Rules and Notification dated 18-6-2012. There is also considerable force in the submissions on behalf of the respondent that in view of the decision of the Hon'ble Supreme Court Ranbaxy Laboratories v. Union of India reported in 2011 (273) E.L.T. 3 (S.C.) that there cannot be any dispute about the liability of the Revenue to pay interest under Section 11BB of the Act commencing from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act. The 6 ST/454/2010 Appellate Tribunal has referred to this decision in its impugned order. Similarly, in view of the orders of the Assistant Commissioner, Division-C, Bangalore, which has remained unchallenged as regards the quantum of refund of unutilized Cenvat credit, there cannot be any lis even as regards the quantum."
In view of the above, we find that there is no substance in the submissions of the learned authorized representative as far as interest on delayed payment is concerned.
6. In view of the above, the appeal is allowed and miscellaneous application is also disposed in the above terms.
(Order pronounced in the Open Court on 10/02/2022) (P. ANJANI KUMAR) TECHNICAL MEMBER (P. DINESHA) JUDICIAL MEMBER ...iss 7