Custom, Excise & Service Tax Tribunal
Mumbai East vs Citicrop Services India Pvt Ltd on 3 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
REGIONAL BENCH - COURT NO. 02
Service Tax Appeal No. 88698, 88701, 88714, 88708,
88695, 88717, 88684, 88700, 88670, 88716, 88713,
88690, 88671, 88673, 86573 of 2018.
(Arising out of Order-in-Appeal No. PK/294 to 308/ME/2017 dated 30.11.2017
passed by Commissioner of CGST & Central Excise (Appeals-II), Mumbai)
Commissioner of C.G.ST .....Appellant
Mumbai East
9th Floor, Lotus Info Centre, Station Road,
Parel (East), Mumbai-400012
VERSUS
M/s Citicorp Services India Pvt. .....Respondent
Ltd.
5th Floor, Citibank Centre, Bandra Kurla Complex, Bandra (East), Mumbai-400051 WITH Service Tax Appeal No. 88676, 88674, 86611, 88688, 88691 of 2018 (Arising out of Order-in-Appeal No. PK/287-293/ME/2017 dated 30.11.2017 passed by Commissioner of CGST & Central Excise (Appeals-II), Mumbai) Commissioner of C.G.ST .....Appellant Mumbai East 9th Floor, Lotus Info Centre, Station Road, Parel (East), Mumbai-400012 VERSUS M/s Citicorp Services India Pvt. .....Respondent Ltd.
5th Floor, Citibank Centre, Bandra Kurla Complex, Bandra (East), Mumbai-400051 Appearance:
Shri M.K. Sarangi, Authorized Representative for the Appellant Shri Prasad Paranjape, Advocate for the Respondent 2 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 CORAM: Hon'ble Mr. S.K. Mohanty, Member (Judicial) Hon'ble Mr. P. Anjani Kumar, Member (Technical) FINAL ORDER NO. A/85821-85840/2019 Date of Hearing: 30.01.2019 Date of Decision: 03.05.2019 Per: S.K. MOHANTY Revenue has preferred these appeals before the Tribunal against the impugned orders No. PK/294 to 308/ME/2017 dated 30.11.2017 and No. PK/287-293/ME/2017 dated 30.11.2017 passed by the Commissioner (Appeals), CGST & Central Excise, Mumbai. Vide the impugned orders, the Learned Commissioner (Appeals) has allowed rebate of service tax paid on output services exported under Notification No. 11/2005-S.T. dated 19.04.2005 and refund of accumulated input tax credit under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012 C.E.(N.T.) dated 18.06.2012 to the respondent. Against the impugned order No. PK/294 to 308/ME/2017 dated 30.11.2017, Revenue has filed 15 numbers of appeals, which were listed as Appeal Nos. 88698, 88701, 88714, 88708, 88695, 88717, 88684, 88700, 88670, 88716, 88713, 88690, 88671, 88673, 86573/2018. In respect of the impugned order No. PK/287-293/ME/2017 dated 30.11.2017, 5 numbers of appeals were also filed by Revenue, listed as Appeal Nos. 88676, 88674, 86611, 88688, 88691/2018. All the above referred 20 appeals are taken up for hearing together and a common order is being passed.
2.1. Brief facts of the case are that the respondent is engaged in the business of providing taxable service under the category of "Banking and other Financial Services", defined under the Finance Act, 1994. The respondent is registered with the service 3 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 tax department for providing such taxable service. During the period between July 2012 and March 2016, the respondent had filed 15 numbers of refund applications, claiming refund of service tax paid on the input services, which were used/utilized for providing the output service exported by them. The refund applications were filed by the respondent under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012- C.E.(N.T.) dated 18.06.2012. The adjudicating authority had partially sanctioned the refund claim and rejected the claims in some of the cases. On appeal filed against rejection of the claim applications, the Learned Commissioner (Appeals) has held that the refund claims filed within one year from the date of receipt of consideration in foreign exchange are within limitation period and as such, the respondent herein should be eligible for the benefit of refund. Further, it has also been held that the respondent herein in eligible to avail Cenvat Credit claimed in respect of Real Estate Agent Service. Feeling aggrieved with the impugned order, Revenue has filed above referred 15 numbers of appeals before the Tribunal.
2.2. Similarly, for the period between October 2010 and June 2012, the respondent had filed 5 numbers of rebate claim applications on the ground that due to the export nature of their output services, they were entitled to rebate of the output service tax paid on such exported services. Against rejection of the rebate applications by the original authority, the respondent had filed appeals before the Commissioner (Appeals), which were disposed of in favour of the respondent, holding that rebate claims filed within one year from the date of receipt of consideration in foreign exchange are within limitation period and the respondent should be eligible for the rebate claims. The Learned Commissioner (Appeals) further held that the respondent is eligible for rebate in respect of the exported 4 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 service, for which FIRCs showing receipt in Indian currency (INR) were issued and that there is no short receipt of consideration inasmuch as the whole amount of consideration mentioned in the invoices was received by the respondent and the difference in the accounting entry is due to fluctuations in the exchange rates. It has also been held that the respondent is eligible to avail Cenvat Credit claimed in respect of Works Contract Service and Real Estate Agent Service. The impugned order No. PK/287- 293/ME/2017 dated 30.11.2017 has disposed of 5 numbers of rebate claims, against which Revenue has preferred the above referred 5 numbers of appeals before the Tribunal.
3. Heard Shri M.K. Sarangi, learned Authorised Representative for Revenue and Shri Prasad Paranjape, learned Advocate for the Respondent and perused the case records, including the written note of submissions filed by both sides.
4. The following findings are recorded in respect of the above referred 15 numbers of appeals filed by Revenue against the impugned order No. PK/294 to 308/ME/2017 dated 30.11.2017:
4.1. The amount involved in Appeal No. ST/88698/2018 is Rs.14,03,208/-, which is below the monitory limit fixed by the Government under the litigation policy. Accordingly, the appeal filed by Revenue is not maintainable and as such, is dismissed under the litigation policy.
4.2. Both sides agree that in respect of Appeal Nos. 88690, 88671, 88673 and 86573/2018, the Learned Commissioner (Appeals) has decided the issue entirely in favour of the Revenue. Considering the submissions, we are of the view that 5 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 the said appeals filed by Revenue are infructuous and accordingly, are dismissed.
4.3. In respect of other 10 numbers of appeals, the stand taken in the grounds of appeal by Revenue is that placing reliance on Notification No. 14/2016-C.E.(N.T.) dated 01.03.2016 by the Commissioner (Appeals) is not legal and proper inasmuch as the same is not clarificatory in nature and will have prospective effect and cannot be applied retrospectively. It has further been contended by Revenue that tax appeal against the decision of Tribunal in the case of Spec India Vs. CST, Ahmedabad [2016-
TIOL-2201-CESTAT-AHM] has been admitted by the Hon'ble Gujarat High Court and as such, reliance placed on such decision of Tribunal in the impugned order cannot hold good for deciding the appeal in favour of the respondent.
4.3.1 Rule 5 of the Cenvat Credit Rules, 2004 permits the service provider for claim of refund of service tax paid on the input services used/utilized for exportation of the output service. In exercise of the powers conferred in the said statutory provisions, the Central Government had issued the Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012, prescribing the procedure, safeguards and limitations for allowing the Cenvat benefit. The said notification, vide paragraph 3(b) has prescribed that the application in prescribed form shall be filed by the claimant before expiry of the period specified in Section 11B of the Central Excise Act, 1944. The said statute has provided for a time limit of one year from the 'relevant date' for lodgement of the refund claim application. Relevant date prescribed therein is in context with situations envisaged under the Central Excise statute, concerning the excisable goods. However, so far as taxable services are concerned, more specifically exportation of taxable service, the 'relevant date' provided under the said 6 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 statute does not consider such aspect. Thus, there was confusion with regard to consideration of the relevant date for computation of the limitation period. Considering the divergent views expressed by different benches of the Tribunal, the matter was referred to the Larger Bench and in the case of C.C.E., CUS. & S.T., Bengaluru Vs. Span Infotech (India) Pvt. Ltd., 2018 (12) G.S.T.L. 200 (Tri.-LB), the Larger Bench has concluded the issue that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR, 2004 may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. We also find that the issue with regard to the relevant date for consideration of refund of service tax on export of service was also considered by the Hon'ble Andhra Pradesh High Court in the case of Hyundai Motors (I) Engineering (P) Ltd., 2017 (49) STR 385 (A.P.) and the Tribunal vide Order No. A/85150-85151/2018 dated 29.01.2018 in the case of M/s. Morgan Stanley India Service Pvt. Ltd., holding that the period of limitation of one year should be computed from the date of FIRC.
4.3.2. With regard to the submissions of Revenue that the Notification No. 14/2016-C.E. (N.T.) is prospective in nature and the benefit provided there-under is not applicable to the claims filed prior to such date, it is the settle principle of law that the beneficial amendment to the statute should be given effect to retrospectively. Considering the constitutional bench judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Vatika Township P. Ltd. - (2014) 367 ITR 466 (SC) on the issue, the Larger Bench of this Tribunal, in the case of Span Infotech (India) Pvt. Ltd. (supra), has held that the relevant date should be considered as the end of the quarter, in which the FIRC is received. The other ground urged by Revenue 7 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 to the effect that tax appeal in the case of Spec India has been admitted by Hon'ble Gujarat High Court, we find that Revenue has not brought on any evidence to show that the said decision of the Tribunal has been stayed or overruled by the Hon'ble High Court. Thus, we do not find any substance on such submissions made by Revenue against the impugned order.
4.4. As regards to the ground urged for denial of the refund benefit of service tax paid on Real Estate Agent Service, we find from available records that such service was used by the respondent for obtaining office premises for rendering the output service, which were exported by them. Since, nexus between the input and output services were established, such disputed service should qualify as input service for the purpose of taking of Cenvat Credit and subsequent refund thereof. Further, the correctness of availment of Cenvat Credit at the stage of filing of refund claim cannot be questioned, since the statute deals with the situation differently.
4.5. In view of the foregoing discussions, we do not find any merits in the appeals filed by Revenue and accordingly, same are dismissed.
5. In respect of the other 5 numbers of appeals filed by Revenue against the impugned Order No. PK/287-293/ME/2017 dated 30.11.2017, the findings are as under:
5.1. The disputed amount involved in Appeal No. ST/88676/2018 and ST/88688/2018 are below the monitory limit fixed by the Government under the litigation policy.
Accordingly, the said appeals filed by Revenue are not maintainable and as such, are dismissed under the litigation policy.
8Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 5.2. Both sides agree that in respect of Appeal No. ST/86611/2018, the Learned Commissioner (Appeals) has decided the issue entirely in favour of the Revenue. Considering the submissions, we are of the view that the said appeals filed by Revenue are infructuous and accordingly, are dismissed.
5.3. The Learned Commissioner (Appeals) has held that the rebate claims filed within one year from the date of receipt of consideration in foreign exchange are within limitation period and accordingly, the respondent should be eligible for such rebate claim. Rebate of service tax paid on the taxable service is governed under Notification No. 11/2005-ST dated 19.04.2005. The said notification provides that rebate of output service tax can be claimed only in cases, where the payment for the exported services is received in convertible foreign exchange. Further, the said notification also mandates that the rebate claim has to be accompanied with proof of receipt of payment in convertible foreign exchange. It is an admitted fact on record that the respondent had complied with the conditions and the procedures laid down under the said notification. With regard to the period of limitation for filing of rebate claim, the issue is no longer res integra in view of Larger Bench decision in the case of Span Infotech (India) Pvt. Ltd. (supra) and the judgment of Hon'ble Andhra Pradesh High Court in the case of Hyundai Motors India Engineering Pvt. Ltd. (supra). Though, the judgments were delivered in context with refund of service tax under Notification No. 27/2012-C.E.(N.T.) dated 18.06.2012, but the concept of relevant date considered therein should equally be applicable to the case of rebate claims. Thus, we do not find any substance in the appeal filed by Revenue with regard to the issue of limitation for filing of the rebate claims.
9Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 5.4. FEMA Regulations and notifications issued there under recognised the receipt of consideration for exports in Indian currency (INR) from the overseas bank account as receipt of foreign exchange. It is for this reason that the authorized dealer i.e. the receiving branch issues the FIRC, even when the currency is received in INR from overseas bank account. We find that the identical issue has also been settled by the Tribunal in the case of Mitsubishi Heavy Industries India Pvt. Ltd. Vs. Commissioner of Central Excise, Delhi II, 2017 (5) GSTL 321 (Tri.-Del.) and Sun-Area Real Estate Pvt. Ltd. Vs. Commissioner of Service Tax Mumbai I, 2015 (39) STR 897 (Tri.-Mum.). Thus, we are of the considered view that the respondent should be eligible for rebate in respect of the export services, for which the FIRCs were issued, showing receipt of INR.
5.5. On perusal of sample copy of FIRCs submitted by the respondent, we find that they had received the entire consideration as expressed in the foreign currency denomination in the invoices and that the difference in the receipt is only due to forex rate fluctuation, which is the internal accounting entry of forex gain or loss reflected by the respondent. Thus, there is no short receipt of consideration as stated by Revenue.
5.6. On perusal of the records submitted by the respondent, we find that the works contract services were used by them for repair and maintenance of UPS system, PAC units and air conditioners installed within the office premises and used in providing the exported output service. Further, the definition of input service (w.e.f. 01.04.2011) excludes works contract service, when the same are used in relation to construction of a building or civil structure or laying of a foundation for any capital goods. In the present case, since the services were used for the purpose of maintenance and repair of UPS systems and air 10 Appeal No. ST/88698,88701,88714 ,88708,88695,88717,88684,88700 ,88670,88716,88713,88690,88671,88673, 86573,88676,88674,86611,88688,88691/2018 conditioners and not for construction of any civil structure, such works contract service, in our considered view, should merit consideration as input service for the purpose of the benefit of refund/rebate claim.
5.7. In view of the above discussions, we also do not find any merits in the appeals filed by Revenue against the rebate claim allowed in the impugned order No. PK/287-293/ME/2017 dated 30.11.2017. Accordingly, the same are dismissed.
(Order pronounced in the open court on 03/05/2019) (S.K. Mohanty) Member (Judicial) (P. Anjani Kumar) Member (Technical) HK