Custom, Excise & Service Tax Tribunal
M/S. Market Tools Research Pvt. Ltd vs Cc,Ce&St & Others on 2 February, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Bench SMB Court I Appeal No.ST/2168, 2169/2012 (Arising out of Order-in-Appeal No.99/2012 Service Tax dt. 27/04/2012 passed by CC,CE&ST(Appeals-II), Hyderabad) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member(Judicial) 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Market Tools Research Pvt. Ltd. ..Appellant(s) Vs. CC,CE&ST & Others Hyderabad-IV ..Respondent(s)
Appearance Shri Abhishek Rastogi and Ms. Rashmi Deshpande, Consultants for the appellant.
Shri A.B. Kulgod, Authorised representative for the respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member(Judicial) Date of Hearing:02/02/2016 Date of decision:02/02/2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The appellants are aggrieved by the rejection of refund claim of unutilized CENVAT credit filed under Rule 5 of CENVAT Credit Rules, 2004 (CCR, in short).
2. The appellants are registered as 100% EOU and are holding Service Tax registration for providing taxable services under the category of Business Auxiliary Service (BAS) and Information Technology Software Services (ITSS) and these services are exported out of India. The appellants filed applications for refund of CENVAT credit under Rule 5 of CCR read with Notification No.5/2006 CE(NT) dt. 14/03/2006 for the month of July 2010 to October 2010 and November 2010 to December 2010 for refund of the accumulated credit of Service Tax paid on various input services. A show-cause notice was served upon the appellants proposing to deny the refund claims. After due process of law, the original authority rejected the refund claims mainly on four grounds. Firstly that the services exported are not taxable services. Secondly that refund claims are time-barred. Thirdly that there is no one-to-one correlation between the inward remittances (FICR) and export invoices and fourthly, that there is no nexus between the input services and the services exported.
3. The appellants carried the issue in appeal and vide the order impugned herein, the Commissioner(Appeals), though observed that the collection of activities rendered by the appellant would fall under taxable category of ITSS which is taxable w.e.f. 16/05/2008, remanded the matter to the adjudicating authority to examine the limited issue of taxability. Being aggrieved by this order, the appellants have preferred the present appeals.
4. On behalf of the appellants, the learned consultant Shri Abhishek Rastogi contended that the Commissioner(Appeals) has erred in remanding the matter to the adjudicating authority. That after the amendment brought forth in sub-clause (3) of Section 35A, the power of Commissioner(Appeals) to remand the matter has been taken away. The Honble Supreme Court in the case of MIL India Ltd. Vs. CCE, Noida [2007(210) ELT 188 (SC)] has observed that the power of remand by the Commissioner(Appeals) has been taken away by amending Section 35A w.e.f. 11/05/2001. With regard to the merits of the case, it is submitted that refund ought to have been allowed even as the services are exported by appellants. Appellants are a STPI unit operating in bonded premises and engaged in providing support services to various affiliates of parent entity, carrying out data processing activities. He argued that even if the services are not taxable, the refund should have been allowed. He drew support from the judgments laid in mPortal India Wireless Solutions Pvt. Ltd., Bangalore Vs. CST, Bangalore [2011-TIOL-928-HC-KAR-ST] and in KPIT Cummins Infosystems Ltd. Vs. CCE, Pune-I [2013-TIOL-931-CESTAT-MUM]. He submitted that the authorities below have erred in holding that the refund claims are hit by limitation. The original authority as well as the Commissioner(Appeals) has computed the period of one year from the date of providing the service. He contended that as services are exported, the relevant date applicable would be the receipt of FICR or at least the filing of ST3 returns and not the date of providing service. If the period of one year is computed from the date of receipt of FICR, the refund claims would be within the period of limitation prescribed under Section 11B. To fortify his arguments, he relied upon the judgments laid in Final Order No.26941/2013 dt. 08/11/2013 in the appellants own case and in the case of Bechtel India Pvt. Ltd. Vs. CCE, Delhi [2014(34) STR 437 (Tri. Del.)]. As regards the issue whether the input services have nexus with the output services, he submitted that the period is prior to 01/04/2011 and all these services would be eligible for credit as has been held in various judgments of the Tribunal and High Courts.
5. Per contra, the learned AR Shri A.B. Kulgod supported the findings in the impugned order. He argued that the refund claims having been filed after a period of one year from the date of rendering the services is barred by limitation. The appellant has also not furnished one-to-one correlation of the inward remittances with the export invoices. The services exported being not taxable, the authorities below have rightly rejected the refund claims.
6. I have heard the rival submissions and also perused the appeal records. The Commissioner(Appeals) has remanded the matter to the original authority to examine the issue of taxability of the services exported by appellant. In para 6.4 of the impugned order, the Commissioner(Appeals) has discussed in detail this issue whether the export services are taxable or not. It is also concluded by the Commissioner(Appeals) that the gamut of activities rendered by the appellant would fall under the taxable category of ITSS. It is seen from the impugned order that after such discussion and holding that such services exported by appellant would fall under the category of ITSS which is taxable w.e.f. 16/05/2008, the Commissioner has remanded the matter to the adjudicating authority for reconsidering the issue of taxability and to allow the refund if otherwise found eligible. As rightly pointed out by the learned consultant appearing for the appellant, the Commissioner(Appeals) has no powers to remand the matter. Therefore the order of remand passed by the Commissioner(Appeals) is unsustainable. As regards the issue whether the refund claim can be rejected for the reasons that the services exported are not taxable, as already discussed, the Commissioner(Appeals) has examined the issue and held that most of the activities/services rendered would fall within the taxable category of ITSS. Further in the judgment of mPortal India Wireless Solutions Pvt. Ltd., (supra) and KPIT Cummins Infosystems Pvt. Ltd. (supra), it has been held that even if the IT enabled services i.e. software consultancy services exported during the impugned period, was classifiable as an exempted service, the benefit of refund under Rule 5 of CCR cannot be denied.
7. Another ground for denying the refund is that the claims are filed beyond the period of one year after rendering the services and therefore is time barred in terms of Section 11B of the Central Excise Act, 1944. It is observed by the Commissioner(Appeals) that in the case of export of services when services are exported on a daily basis, the period of 14 days to raise an invoice is only a facilitation given to the appellants and that the date of invoice cannot be taken as a relevant date. That the date of export of service has to be considered to compute the relevant date. The appellants have contended that for the purpose of refund under Section 11B, the relevant date to be considered is either the date of payment of service tax for input services or the date of receipt of consideration (FICL) for export of services and not the date when the services were provided. In CC,CE&ST, Hyderabad-IV Vs. Hyundai Motor India Engg. (P) Ltd. [2015(39) STR 984 (AP)], the Honble High Court has upheld the decision of the Tribunal that the relevant date would be the date of receipt of consideration(FICR). In the present case, if the period of one year is computed from the date of receipt of the FICR, the refund claims would be within the time limit. Following the ratio laid in the judgment of the jurisdictional High Court in the case of Hyundai Motor India Engg. (P) Ltd.(supra) and also in the case of Market Tools Research (P) Ltd. (supra), I find that the refund claims are not time-barred.
8. The other ground on which the refund claim was denied is that there is no one-to-one correlation between the inward remittances and the services exported. There is no dispute with regard to services exported or the inward remittances received. There is no requirement that there should be one-to-one correlation between the remittances and the export documents. On such score, I am of the view that the denial of the refund on the ground that FICR and export invoices did not show one-to-one correlation is not justifiable. The refund has been denied for the reason that input services do not have nexus with the output services. The period involved is prior to 01/04/2011 when the definition of input services had a wide ambit as the definition included the words activities relating to business. The services if necessary for business of the appellant would qualify as input services.
9. From the foregoing discussion, I am of the view that the denial of refund is unjustified. The impugned order denying the refund is set aside and appeal is allowed with consequential reliefs, if any.
(Operative part of this order was pronounced in court on conclusion of the hearing) SULEKHA BEEVI C.S. MEMBER(JUDICIAL) Raja.
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