Custom, Excise & Service Tax Tribunal
Tata Consultancy Services Ltd vs Commissioner Of Central Excise & ... on 18 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/185, 188 & 446/2012-MUM (Arising out of Order-in-Appeal No. YDB/13 & 14/LTU/MUM/2011 dt. 23.12.2011 & OIA No.LTU/MUM/C(A)-27/2011/P dt.27.2.2012 passed by the Commissioner (Appeals) Central Excise & Service Tax (LTU) Mumbai) For approval and signature: Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
=============================================================
Tata Consultancy Services Ltd.
:
Appellant
VS
Commissioner of Central Excise & Service Tax, (LTU) Mumbai
:
Respondent
Appearance
Shri J.F. Pochkhanwala Sr. Advocate with
Shri Sunil Gabhiwala, C.A. for Appellant
Shri D. Nagvenkar Additional Commissioner (A.R) for respondent
CORAM:
Mr. Anil Choudhary, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 18/12/2014
Date of decision : 18/12/2014
ORDER NO.
Per : P.S. Pruthi
M/s. Tata Consultancy Services Ltd., the appellant, have filed appeals against the impugned Orders-in-Appeal No. YDB/13 & 14/LTU/MUM/2011 dt. 23.12.2011 & OIA No. LTU/MUM/C(A)-27/2011/P dt.27.2.2012 passed by the Commissioner (Appeals), who upheld the orders of the adjudicating authorities rejecting the rebate claims filed by them in terms of Notification No. 11/2005 dt. 19.4.2005 issued under Rule 5 of the Export of Services Rules 2005. The three Orders-in-Appeal relate to the appellants units at Mumbai, Chennai and Bangalore. Since all their cases were transferred to the LTU at Mumbai, the Orders-in-Appeal were passed by the Commissioner (Appeals) for LTU, Mumbai. The issue involved in all the three Orders-in-Appeal is common to a large extent and, therefore, the matter is being taken up together in respect of all three orders. Where there is a variation in issue involved, that will be addressed by us separately in this order.
2. The facts of the case are that the appellant are having centralized registration with the service tax department under the category Management Consultant, Business Auxiliary Service, Maintenance or Repair Service, Architects Service, Erection, Commissioning and Installation Service, Test, Inspection and Certification Service, Online Information and Data Service, Business Support Service, Sponsorship Service, Commercial Training & Coaching Service, Advertising Agency Service, Consulting Engineering Service, Manpower Recruitment Agency Service, Renting of Immovable Property Service, Transport of Goods by Road Service, Market Research Agency Service, Credit Card and Related Service, Information Technology Service. They filed refund claims for rebate of service tax paid on taxable services which are exported in terms of Rule 3 of Export of Service Rules, 2005, for the period October 2008 to December 2008 in the case of Mumbai and Bangalore and for the periods October 2008 to December 2008 and April 2009 to June 2009 for Chennai. The rebates were filed under notification No. 11/2005-ST dt. 19.4.2005 issued under Rule 5 of Export of Service Rules, 2005. The appellants claimed that they exported various services i.e. Information Technology Software Service, Business Support Service, Management Maintenance and Repair Service, Technical Testing and Analysis Services to M/s. Tata America International Corporation operating as M/s. TCS America. They submitted the following documents along with application for refund claims (ASTR-1)
(a) Copies of the invoices raised to their clients- M/s. TCS America-along with softex forms as proof of Export for the period of Export.
(b) Foreign Inward Remittance Certificate (FIRC) with details of Invoice No. and Invoice amount against which the remittances were received.
(c) Details of Invoice on which export rebate is claimed along with details of money received against the same.
(d) Cenvat availed details for the relevant period.
(e) A statement (ST-3) for the same period giving all details.
2.1. The adjudicating authority rejected the rebate claim for the following reasons:
(i) As per Rule 4 A of Service Tax Rules, 1994 it is mandatory that every person providing taxable services shall issue an invoice and that invoice shall contain all details, among others, the service tax payable thereon. But the invoices submitted by the appellant neither show any description of services exported nor any details about the service tax element thereon. Therefore, the assesses claim that the tax on the services exported has been paid, is not acceptable.
(ii) The assessee have failed to provide any documents to show that services have been exported under submitted invoices and the service tax paid. Further against the claim that in Notification 11/2005-ST dated 19.4.2005 no such procedure has been prescribed for export of goods, the Notification 11/2005-ST dated 19.4.2005 clearly prescribes conditions and limitations to be followed.
(iii) As per Section 65 of the Finance Act 1994, all taxable services are defined and therefore simply mentioning the name and address of the client, location etc. does not establish that the service have been specified in the invoices. The invoices submitted do not show the description of the services exported and the element of service tax, which are mandatory under Rule 4 of the Service Tax Rules, 1994. Therefore export of services is not established.
(iv) The details of the services exported are required to be declared in the SOFTEX Form also, but the SOFTEX forms are not showing such declaration. Therefore, the claim of export of services is not acceptable.
(v) TCS America has been awarded contracts by clients viz. Worldspan L.P., Olive Software, Honeywell Inc. and IT Corporation, and further sub contracted the same to TCS India. But this fact is not shown in their (TCS America) Master Service Agreement with clients.
(vi) With reference to CBEC Circular No. 868/6/2005-CX dt. 9.5.2008, they are liable to establish with documentary evidence that they exported the services and paid service tax but they failed to do so.
(vii) The appellant has not established with documentary evidence that the cenvat credit utilized for payment of service tax on the exported services has been correctly availed and have not submitted documents to establish that correctness of the availability of the cenvat credit.
(viii) The invoices and the Softex Forms fail to establish that the services have been exported and therefore the FIRC submitted in support of their claim export of services is not acceptable.
2.3. The Commissioner (Appeals) upheld the order of the adjudicating authority and confirmed the rejection of the rebate claim as under :
The appellants are located in Software Technology Park of India. The services are exported through Software Technology Park of India. The SOFTEX form submitted by them reflect the name and address of the Country, the type of software exported and value of export. It does not reflect details of services exported. These SOFTEX forms are also not certified by the STPI authorities. In many cases incorrect certificates are attached to the SOFTEX form. A statement of invoices is appended with the SOFTEX form as Annexure which indicates the period. Project No., Invoice No/date, Invoice amount (in foreign currency and INR). The FIRC submitted as proof of the amount received in India in convertible foreign exchange indicates the beneficiary, purpose of remittance as per Annexure which indicate the customer name, transaction No. & date, amount received in foreign currency and converted INR. There is no specific description of the services in any of the documents and therefore, it is not possible to ascertain the category of services against which the appellants have claimed rebate. Consequently the conditions, limitations and procedure prescribed for claim of rebate vide Notification No. 11/2005-ST dated 19.4.2005 issued under Rule 5 of Export of Service Rules, 2005 has not been fulfilled The appellants contention that the description is technical in nature and that the name and address of the client, location to which services are rendered clearly suggest that the services have been exported is not tenable. In the absence of proper/specific description of the services the correctness of the correlation of invoices with the corresponding SOFTEX form and FIRC as certified by the Chartered Accountant also is not acceptable.
3. Heard both sides.
4. The Ld. Counsel for the appellant at the outset stated that they have submitted each and every document running into volumes of paper books to establish that the rebate claims were made on the basis of documents evidencing the nature of service exported and co-relating the same with the classification of service under the Finance Act, 1994, the invoices under which the services were exported, the Softex form relating to each invoice, the certification of the Softex forms by STPI authorities in every case, FIRC certificates co-relating the foreign inward remittance with each invoice, and lastly the sales registers showing the invoices under which the services were exported, the category of the service, the payment of service tax through the cenvat account. The Ld. Counsel further stated that the appellants were held ineligible for rebate basically for the following reasons:
(a) The SOFTEX Forms do not reflect the details of service exported.
(b) The forms are not certified by STPI Authorities.
( c) In many cases, incorrect certificates are attached to the SOFTEX Forms.
(d) There is no specific description of the services in any of the documents.
(e) The category of taxable services cannot be ascertained.
(f) In view of the above, the conditions and limitations mentioned in Notification No. 11/2005-ST are not fulfilled.
4.1. Ld. Counsel vehemently added that the rejection of refund only because the description details in the export invoices do not match description of services under Section 65 (105) is patently wrong because notification No. 11/2005 does not refer to the invoices issued under Rule 4A. Therefore, the rebate notification must be construed in the direct language in which it is framed and nothing exterior should be considered as long as they have given enough evidence to establish the export of services and payment of service tax as well as the receipt of foreign exchange as evidenced by the FIRC, for services exported. He relied on the Supreme Court judgment in the case of Commissioner of Central Excise, Jaipur Vs. Mewar Bartan Nirman Udyog. 2008 (231) ELT27 (S.C.) The Ld. Counsel further argued that once they have followed the conditions of a notification and discharged the burden of establishing eligibility in terms of the notification, the onus shifts to the department to prove with some cogent evidence that they are not eligible for the rebate in terms of the notification. According to him, simply referring to Rule 4A which provides that invoices have to be issued while providing taxable services cannot be a basis for rejecting the rebate. Further, simply stating that there are missing elements in the invoice whereas actually every aspect can easily be explained from their very records already submitted to the adjudicating authority and appellate authority, cannot debar them under the Notification, when they have satisfied all the conditions and procedures laid down in the notification. The Ld. Counsel placed on record an order of Assistant Commissioner, Delhi, who has sanctioned their refund claim in the same set of facts and circumstances. He states in Court that, as per their knowledge, the order of the Assistant Commissioner has not been appealed against by the Revenue. Further, that the entire amount of rebate has already been paid by Assistant Commissioner, Delhi. On the issue of unjust enrichment, the Ld. Counsel stated that it is not an issue in this case because the adjudicating authority had not gone into this aspect.
5. The Ld. A.R. appearing for Revenue reiterated the findings of the Commissioner (Appeals). He argued very strongly that since rebate is to be sanctioned for duty paid on taxable services exported, the applicability of Rule 4A become significant as it requires that all taxable services are to be provided under an invoice containing the following:
i) Name, address and registration number of such person;
ii) Name and address of the person receiving taxable service;
iii) Description and value of taxable service provided or agreed to be provided;
iv) The service tax payable thereon.
He argued that unless invoices contained these details, it would not be possible to verify the export of services with the foreign remittance receipt. He also contended that it is absolutely essential to give description of the taxable service, in the documents, further that the description given on the invoices under which the export of services took place is not easily understood because the description does not match with any of the categories of services given in Section 65(105) of the Finance Act, 1994. He even showed one invoice No. USF 1200927186, in which the description is mentioned GBIP Non-SAP Finance off and said this cannot be deciphered as any of the services mentioned under Section 65(105).
5.1. In the case of refund claim pertaining to the Chennai Office of the appellant, he pointed out two more objections. The first is that some input services have been utilized in providing the export output services and these input services namely catering do not have any nexus with the export services. The second point is that two of appellants units in Chennai are located in the SEZ and the export of services tax took place from these units. According to him, as held by the adjudicating authority, service tax is not leviable on the provisions of services into the SEZ units and therefore the question of taking cenvat credit by such units and thereafter utilizing the cenvat credit to pay the service tax on the exported services does not arise. The Ld. AR also contended that notification No. 11/2005 is not an exemption notification; it is only a notification to provide for rebate subject to following of certain conditions and procedure.
6. We have considered the rival contentions. The basis for holding (by Revenue) that the rebate is not admissible centers around the following five points :
(a) The SOFTEX Forms do not reflect the details of service exported.
(b) The forms are not certified by STPI Authorities and in many cases, incorrect certificates are attached to the SOFTEX Forms.
(c) There is no specific description of the services in the documents matching the description of services in Section 65(105) and the category of taxable services cannot be ascertained and various documents viz invoices, softex forms, FIRCs cannot be correlated.
(d) The invoices do not mention particulars as required under Rule 4A ibid.
(e) In view of the above, the conditions and limitations mentioned in Notification No. 11/2005-ST are not fulfilled for grant of rebate.
6.1. Before taking up these objections, it would be useful to refer to the legal provisions under which the rebate is sanctioned. Rule 5 of the Export Service Rules states as under:
Rebate of service tax.- Where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification.
Notification No. 11/2005-ST issued under Rule 5, grants rebate subject to the conditions, limitations and procedures as stated below:
2. Conditions and limitations:-
(a) that the taxable service has been exported in terms of rule 3 of the said rules and payment for export of such taxable service has been received in India in convertible foreign exchange;
(b) that the service tax and cess, rebate of which has been claimed, have been paid on the taxable service exported;
(c) the amount of rebate of service tax and cess admissible is not less than five hundred rupees; and
(d) that in case,-
(i) the service tax and cess, rebate of which has been claimed, have not been paid; or
(ii) the taxable service, rebate on which has been claimed, has not been exported, the rebate paid, if any, shall be recoverable with interest as per the provisions of section 73 and section 75 of the Finance Act, 1994 (32 of 1994) as if no service tax and cess have been paid on such taxable service.
3. Procedure:-
(i) claim of rebate of service tax and cess paid on all taxable services exported shall be filed with the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be;
(ii) such application shall be accompanied by, a.
documentary evidence of receipt of payment against taxable service exported and for which rebate is claimed, payment of service tax and cess on such taxable service exported;
b.
a declaration that such taxable service, rebate of service tax and cess paid on such service is claimed, has been exported, in terms of rule 3 of the said rules, along with the documents evidencing the export of such taxable service;
(b) The jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, if satisfied that the claim is in order, shall sanction the rebate either in whole or in part.
6.2. We find from the above that the essential conditions of Notification No. 11/2005 are that the taxable service should be exported and the payment for export should be received in India in convertible Foreign Exchange and the service tax should have been paid on the taxable service exported. We find from the documents produced by the appellant that services have been exported and foreign remittances received and also that the service tax and cess has been paid for rebate which is claimed. Procedure laid down under para 3 of Notification requires the rebate application to be accompanied by documentary evidence in respect of the above and a declaration that the taxable service has been exported. We find that the main contention of Revenue is that they could not comprehend the nature of service described in the export services. We have examined some of the export invoices. In fact we have examined precisely those six invoices which were taken up for verification by the Assistant Commissioner under refund Order No. BR/386/2009 dt. 20.11.2009. The Ld. Counsel has taken us through a series of documents in respect of these very invoices which indicate that the description in the invoices is such as would be covered under the category of Business Support Service or Information Technology Service or Maintenance and Repair Service. These documents have been submitted to the adjudicating authority also. But he apparently did not as much as even care to understand or go through the voluminous documents. We have also seen the co-relation between invoice number and the FIRC certificates as is evident from the Table below at para 6.3 Once, having declared to the department the specific classification under Section 65(105) of each of the services provided as mentioned in the invoices, we fail to understand how the adjudicating authority has come to the conclusion that the description of services is not given in the invoices. Once a particular description is explained by the appellant to be covered under a specific service classified under Section 65 (105), the onus is on the department to prove that it is not covered by that service under Section 65 (105). Unfortunately, the adjudicating authority and appellate authority have failed in following the basic principles of justice.
6.3. The Ld. Counsel also showed the Softex Forms in respect of each of these invoices which are certified by the STPI authorities, and the FIRC certificates relating to each invoice. We do not appreciate how the adjudicating authority failed to notice the certification done by STPI authorities on the Softex forms. The co-relation of various documents as seen by us is shown below in the form of a chart.
Tata Consultancy Services Limited Appeal before CESTAT Mumbai Correlation of the Invoices Alleged in The SCB (Refer Page 117 of the Paper Book) Sr. Invoice Numbers Date Description of Service on Invoice Value of Service (USD) Correlation with the Sales Register Category of Service SOFTEX No. FIRC No. I USFI200930880 01.12.2008 Fees for Services Rendered as per Annexure Attached 66006.26 Pg 357 Sr. 1 Business Support Service Vikhroli/Q3(08-09)/017 230323 Ii USFI200924259 28.10.2008 Fees for Services Rendered as per Annexure Attached (Automatic Event for 209056) 8311.70 Pg. 354 Sr. 595 Business Support Services Thane/Q3(08-09)/048 149160 Iii USFI200931539 11.12.2008 HIET Support Dec08 8892.72 Pg 354 Sr. 601 Information technology software services Thane/Q3(08-09)/048 230323 Iv USFI200931296 02.12.2008 Matrix One/Engineering Central ADK, TCI, MQL/Thick Client RMI Scheme 20158.91 Pg. 356 Sr. 670 Management Maintenance and Repairs Services Thane/Q3(08-09)/048 23023 V USFI200932554 22.12.2008 Monthly Service Charges 7831.25 Pg. 356 sr. 666 Management Maintenance and Repairs Services Thane/Q3(08-09)/048 72484 Vi USFI200930917 01.12.2008 November 2008 Delivery Cycle 7 14778.24 Pg. 357 Sr. 714 Technical Testing and Analysis Services Thane/Q3(08-09)/048 23023 It is unfortunate that the department did not care to go into these details. These details have been provided by the appellant in the form of a large volumes of papers. It is apparent that the adjudicating authority has shown laziness and not cared to go through the papers whereas, in fact, the same authority in order No. PB/R/130/2009 in para-3, himself admits that the documents were submitted. He is contradicting his own statements.
7. A contention of Revenue is that the element of service tax which is mandatorily required to be mentioned under Rule 4 of the Service Tax Rules is not shown in the export invoices. The appellants contention is that they do not show the element of service tax in the invoices; however they have shown their records evidencing payment of service tax in respect of each invoice. Therefore, we are of the view that omitting to mention amount of service tax on the invoices when there is documentary evidence showing payment of service tax in the books of accounts maintained by the appellant, cannot debar them from the claim of rebate under notification No. 11/2005. We do appreciate the Ld. ARs contention that all taxable services to be provided must be accompanied by an invoice showing the particulars required under Rule 4A. But this omission, in the face of documentary evidence shown to us, is no reason to deny the substantial benefit of the notification. Revenue authorities should have co-related the huge volume of documents submitted by the appellant, no matter how voluminous, before arriving at a judicious decision. In view of the documents placed on record and their correlation, we hold that the rebate is admissible to the appellants on merits.
8. We may now take up other contentions of the adjudicating authority and appellate authority. The first issue is that the details of services exported are not mentioned in the Softex Forms. We hold that since the service mentioned in the Softex Forms is the same as that mentioned in the invoices which have been shown to co-relate with the specific services falling under Section 65(105) in the documents submitted by the appellant to us as well as to the revenue authority the contention is not correct.
8.1. The second point is that TCS America was awarded contracts by its clients in turn it and outsourced services to TCS India. The adjudicating authority observed that the fact of outsourcing is not shown in the Master Agreement between TCS America and their clients. We find that this is not a requirement of Notification No. 11/2005 and the Master Service Agreement need not show the names of the sub-contractors, that is TCS India, to whom work of providing services has been outsourced by TCS (America). The issue at hand is only the service transaction between TCS America and TCS India. Therefore this contention is rejected by us.
8.2. The third point is that, the assessee is liable to establish with documentary evidence that Cenvat Credit has been correctly availed. The appellants have shown us documents which establish that the Cenvat was utilized for payment of tax on the services exported. In any case, the correct availment of Cenvat Credit was not an issue with the adjudicating authority nor has he pointed any deficiency on this account. On the other hand, the appellant had provided the entire cenvat register which gives the details of input services on which cenvat credit has been availed. Therefore this contention is not accepted.
8.3. The fourth point is that in the case of Chennai Unit, Ld. A.R. raised the issue of admissibility of Cenvat Credit on the input services namely, Travel Agents Service, Professional charges and Foreign Currency Conversion Charges. It is very strange on the part of the adjudicating authority to come to a conclusion when the admissibility and utilization of Cenvat Credit for payment of service tax has not been discussed by him. The adjudicating authority has not given any sound reasoning to hold that there is no nexus between these input services and the output services. These services are related to the business of the service provider and are clearly admissible as input services under the definition of Input Services in Rule 2(l) of the Cenvat Credit Rules. There is a catena of judgment holding admissibility of credit on these input services such as Commissioner of C. Ex., Nagpur Vs. Ultratech Cement Ltd. 2010 (20) S.T.R. 577 (Bom.). We reject this contention. The other argument raised by the Ld. A.R. relates to services exported from the SEZ units of the appellant in Chennai. There are two parts to this objection; the first is whether cenvat credit would be available to these units in respect of input services received by them. We find no provision in law which debars this. The second part of the argument is the taxability of service exported from the SEZ units. Here also there is nothing in the statute which says that the tax should not be paid on taxable service exported from the SEZ units. We reject this contention also.
9. We are constrained to point out that the authorities have been casual in dealing with this refund claim, both in terms of factual verification as well as in terms of the legality of the case. We also note that, in exactly similar circumstances on a similar set of facts, the Assistant Commissioner (AC) in Delhi has granted the rebate claim to the appellant and as stated by them, the Order of the Assistant Commissioner has been accepted by the department. It is unfortunate that two units of the appellant in different jurisdictions received contradictory orders in the same set of facts. Therefore, we direct that a copy of this Order may be forwarded to Chairman CBEC by the Registry to being this fact to his notice.
10. We also observed that the rebate claim relates to the years 2008-2009 and 2009-2010. Already six years have passed. We have held that rebate is admissible merits. At the same time, this Tribunal cannot go into the verification of the quantum of refund.
11. Therefore, we remand the case back to the adjudicating authority in LTU. for the limited purpose of verification of the quantum of rebate to be sanctioned to the appellant. Interest will also be paid in accordance with law. In view of the fact that six years have passed and also the fact that Assistant Commissioner Delhi has sanctioned the rebate claim, it would be in the interest of justice to decide the case early. We direct the adjudicating authority to pass an order within three months of the receipt of this order.
12. Appeal is allowed in the above terms.
(Pronounced & Dictated in court) (Anil Choudhary) Member (Judicial) (P. S. Pruthi) Member (Technical) Sm ??
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