Custom, Excise & Service Tax Tribunal
Axa Business Services Pvt. Ltd vs Commissioner Of Service Tax on 4 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: ST/1062/2010-DB [Arising out of Order-in-Appeal No. 20/2010 dated 12/01/2010 passed by the Commissioner of Central Excise, Bangalore] For approval and signature: HON'BLE MR. JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HON'BLE MR. V. PADMANABHAN, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes AXA Business Services Pvt. Ltd. 16/2, Residency Road Bangalore 560 025 Appellant(s) Versus Commissioner of Service Tax Bangalore 1st to 5th Floor, TTMC Building Above BMTC Bus Stand, Domlur Bangalore 560 071 Respondent(s)
Appearance:
Mr. L.S. Karthikeyan, Advocate 505-508, North Block, Brigade Plaza, 71/1, Subedar Chatram Road, Anandrao Circle, Bangalore 560 009 For the Appellant Mrs. Ezhil Mathi, DR For the Respondent Date of Hearing: 14/10/2016 Date of Decision: 04/11/2016 CORAM:
HON'BLE MR. JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HON'BLE MR. V. PADMANABHAN, TECHNICAL MEMBER Final Order No. 21079/2016 Per: V. PADMANABHAN The present appeal is directed against the Order-in-Appeal dated 12.01.2010 passed by the Commissioner (Appeals), Bangalore. The appellant is a 100% EOU registered with Service Tax for carrying out Business Auxiliary Services, Business Support Services, Renting of Immovable Services and IT Enabled Services. The present dispute is regarding the rejection of refund claim filed for Rs. 3,06,51,324/- (Rupees Three Crores Six Lakhs Fifty One Thousand Three Hundred and Twenty Four only) for refund of unutilized cenvat credit of service tax, as per Notification No. 5/2006-CE (N.T) dated 14.03.2006, on the input services availed by them for export of services. The claim pertains to the export carried out in September 2007 and stands filed on 03.06.2008. The refund claim was rejected by the original authority vide his order dated 15.10.2008. When the matter was carried in appeal, the Commissioner (Appeals) vide the impugned order upheld the same. Hence the present appeal before the Tribunal.
2. The refund stands rejected by the authorities below on the following grounds:
(i) The appellant has exported software. Since software services were not taxable to service tax during the relevant time, the refund was held to be inadmissible.
(ii) The appellant has failed to file claim for refund on quarterly or monthly basis for the refund of unutilized cenvat credit, as required under Notification No. 5/2006.
(iii) The appellant has availed the credit on input services during the period April 2006 to March 2007 and has claimed that these are co-relatable to the services exported during September 2007. The lower authorities have rejected the claim by taking the view that the input services for which credit has been availed are not connected to the services exported and no documentary evidence to this extent has been submitted.
3. The present appeal has been filed mainly on the following grounds:
i) The refund of input tax credit should be sanctioned since the same has been used in the export of services. Even if the software service is not considered as a taxable service, the refund will be payable to them. In their support they have relied on the following case-laws:
a) M/s mPortal Wireless Solutions 2012 (27) STR 134 (Kar.)
b) Repro India Ltd. 2009 (235) E.L.T. 614 (Bom.)
c) Final Order Nos. 20896-20903/2014 in B.A. Consortium
ii) There is no bar in claiming the refund of accumulated cenvat credit as long as the services have been exported. The CBEC Circular No. 334/1/2010 dated 26.02.2010 has clarified this aspect. Further, retrospective amendment carried out in Finance Act 2010 and Notification 7/2010-CE (N.T) amending Notification No. 5/2006-CE (N.T), retrospectively has made it clear that as long as input services are used for providing output services which have been exported, refund of the same will be allowable.
(iii) The appellant has placed reliance on the Final Order No. 20824-20834/2015 dated 23.03.2015 passed by this Bench in the matter of Sai Advantium Pharma Ltd. and Apotex Research reported at 2014-TIOL-1836-CESTAT-BANG.
4. Heard Mr. L.S. Karthikeyan, learned advocate for the appellant as well as Mrs. Ezhil Mathi, learned DR appearing for the Revenue.
5. The first ground in which the refund stands rejected is that the services which have been exported were not taxable during the relevant period. The Notification No. 5/2006-CE (N.T.) dated 14.03.2006 which has been issued under Rule 5 of the Cenvat Credit Rules 2004 specifically allows refund of cenvat credit availed on inputs or input services which have been used for providing output services which have been exported. There is no condition in the Notification which prescribes that the refund will be allowable only in cases where the output services exported is liable for payment of service tax. Hence we find that such a view taken by the authorities below is without any basis. In any case the Tribunal in the case of KPIT Cummins Infosystems Ltd. Vs. CCE reported in [2013 (32) S.T.R. 356 (Tri.)] held that cenvat credit for export of exempted service would be available as refund.
5.1. The second ground for rejection is that the appellant has failed to file the refund claims on a quarterly or monthly basis for the unutilized cenvat credit. The condition specified in the appendix to the notification is that the claims for refund are to be submitted not more than once for any quarter in a calendar year. Further it allows the claims from Export Oriented Units to be filed for each calendar month. From a reading of the conditions appended to the notification, we find that the claims are allowed to be filed on a quarterly/monthly basis but this condition cannot be read to mean that refund will be payable only after the claims are filed on a quarterly/monthly basis. It is clearly in the nature of an option given to the assessee to file refund claims on a quarterly or monthly basis and failure to do so cannot be a ground for rejection of the refund claim.
5.2. The present refund claim relates to the export of services during the month of September 2007. It is also a fact on record that the cenvat credits which are utilized for such export in September 2007 have been availed during the months of April 2006 to March 2007. The lower authorities have taken the view that input services availed during April 2006 to March 2007 are not relatable to the services exported in September 2007. This situation has arisen from the fact that the credit of input services has not been taken during the period for which the refund has been claimed. This brings us to the question whether credit availed for a period prior to the quarter/month for which the refund has been claimed is eligible for refund or not? We find that this specific issue has been considered at length and decided in favour of the appellant in the Final Order Nos. 20824-20834/2015 dated 23.03.2015 in the case of Sai Advantium Pharma Ltd. For ready reference we give below the relevant para of the order of the Tribunal in the case of Sai Advantium Pharma Ltd.
5. We find that according to the provisions of CENVAT Credit Rules during the relevant time, there was no time prescribed for taking the credit. In the absence of time limit prescribed, there are several decisions of the Tribunal that credit could not have been denied. Once credit was admissible and unless there was no nexus between the output service exported and input services were used when credit was taken, the refund of the same also could not have been denied since the substantive ground of taking CENVAT credit in the first place being correct would lead to the obvious conclusion that ultimately if it gets accumulated the refund has to be sanctioned. Notification No. 5/2006-CE(NT) is issued to provide safeguards and conditions to implement the sanction of refund envisaged under Rule 5 and not to defeat the purpose of whole CENVAT credit scheme. Therefore once credit is admissible and taken and not held to be inadmissible and if it gets accumulated, the conditions in Rule 5 can be said to have been fulfilled. It cannot be said that the input service has not been used for providing output service. The only question is that the credit was taken subsequently and therefore it had already been used when credit was taken. There is also a Boards instruction saying that the CENVAT credit taken forms a pool and can be used for any purpose once credit is admissible. Moreover the reliance of the learned counsel on Circular No. 120/01/2010 dt. 19/01/2010 to submit that there cannot be different yardsticks for establishing nexus for taking credit and refund of credit is correct. Moreover as submitted, Notification No. 7/2010 amended Notification No. 5/2006 that retrospective effect from 14/03/2006 to provide that input/input service used for providing output services which have been exported instead of used in providing output service also supports the claim of the appellant. Moreover according to Notification No. 7/2010, according to the learned counsel, it is provided that credit of input services need not be taken during the period for which refund has been claimed. The above discussion would show that credit is admissible and refund is also admissible. Moreover in the Interim Order referred to hereinabove in para 6.1., this issue was considered and we find that is also relevant.
6. In line with the above discussion, we find that the rejection of the refund claim filed under Notification 5/2006-CE (NT) is without justification. Consequently the impugned order is set aside with consequential benefit. Appeal is allowed.
(Order pronounced in open court on 04.11.2016) (JUSTICE DR. SATISH CHANDRA) PRESIDENT (V. PADMANABHAN) TECHNICAL MEMBER iss