Custom, Excise & Service Tax Tribunal
Mckinsey Global Services India Private ... vs Commissioner Of Gst&Amp;Cce (Chennai ... on 7 February, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal Nos. ST/42370 & 42371/2018
(Arising out of Order-in-Appeal No. 346 & 347/2017 (CTA-
II)dated 20.7.2010 passed by the Commissioner of GST &
Central Excise (Appeals - II), Chennai)
M/s. McKinsey Global Services India Pvt. Ltd. Appellant
Vs.
Commissioner of GST & Central Excise
Chennai Respondent
Appearance Shri Harish Bindhumadhavan, Advocate for the Appellant Shri M. Jagan Babu, AC (AR) for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Date of Hearing / Decision: 07.02.2019 Final Order Nos. 40249-40250 / 2019 Brief facts are that the appellants, who were formerly known as 'Visual Graphics Computing services India Pvt. Ltd., filed refund claims for the period April to June 2016 and July to September 2016. After due process of law, the original authority denied the credit as well as the refund in respect of accommodation services and air travel agency service. The appellant approached the Commissioner (Appeals) against the 2 said order who upheld the rejection of refund in respect of these services. Aggrieved, the appellants are now before the Tribunal.
2. The ld. counsel Shri Harish Bindumadhavan has given the details of the impugned services, period of dispute and the amount involved as per the Table furnished below:-
Particulars Details Total Appeal No. ST/42370/2018 ST/42371/2018
Period of dispute April - June 2016 July - September 2016 Total CENVAT 1,70,593/- 2,62,858/- 4,33,451/- Credit disallowed Input services Short term accommodation and hotel 4,33,451/-
involved room charges
3. He referred to Rule 5 of CENVAT Credit Rules, 2004 as amended and submitted that the said Rule nowhere uses the term 'nexus'. In fact, after the amendment brought forth in Rule 5 with effect from 1.4.2012, any input services are eligible for credit for the person who is providing the output service. The word 'used' has been omitted by such amendment. The authorities below have rejected the refund claim stating that the appellant has not established any nexus between the input services and the output services. It is also opined by the authorities below that the services do not contribute or add value to the output services provided by the appellant. He relied upon the decision of the Tribunal in K Line Ship Management (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai - 2017-TIOL-2406-CESTAT-MUM to argue that the department cannot reject the refund claim by stating that the credit is not eligible. In fact, in the present case, the department had not 3 issued any show cause notice alleging that the credit is not eligible to the appellant. In such case, as per Rule 5, the department has to process the refund claim and cannot go into the admissibility of the credit. He also relied upon the decision in the case of Harsco India Services Pvt. Ltd. Vs. Commissioner of Central Excise, Hyderabad - 2017-TIOL-528-CESTAT-HYD to argue that after the amendment, it is not necessary to establish the nexus that the input services were used for providing output services and also relied upon the Board circular DOF No. 334/1/2012-TRU dated 16.3.2012. It is also submitted by him that the Tribunal in the appellant's own case vide Final Order No.43375 to 43381/2017 dated 27.12.2017 had considered the very same issue and allowed the refund claim. Though this decision was brought to the notice of the authorities below, the same was not considered.
4. The ld. AR Shri Jagan Babu supported the findings in the impugned order.
5. Heard both sides.
6. The issue is with regard to the rejection of refund claim in respect of short-term accommodation service and air travel agency service. The appellant has pleaded that these services were used for accommodation of the employees when they were undertaking business travel and therefore is eligible for refund. The Commissioner (Appeals) has rejected the refund claim holding that the appellant has not proved the nexus of the input 4 service with the output service and that there is no value addition of these services for the output services. In fact, there has been no show cause notice issued by the department alleging that the appellants are not eligible for credit of these services. When the department has not raised any allegation by issuing show cause notice that the appellant is not eligible for credit, they cannot go into the admissibility of the credit during the process of refund claim. Further, as per amended provisions of Rule 5, it is not necessary to establish the nexus with the output service. The Board circular clarifies the same. The Tribunal in the case of Kline Ship Management (India) P. Ltd. (supra) has made the following observations:-
"Rule 14. Recovery of CENVAT Credit wrongly taken or erroneously refunded.-
Where the CENVAT credit has been taken wrongly but not utilised, the same shall be recovered from the manufacturer or the provider of output service, as the case may be, and the provisions of section 11A of the Excise Act or section 73 of the Finance Act, 1994 (32 of 1994), as the case may be, shall apply mutatis mutandis for effecting such recoveries. In the instant case no show-cause notice has been issued under Cenvat Credit Rules and in these circumstances, it is not permissible to deny Cenvat Credit already availed. In the instant case, the appellant had claimed refund claim and the same needs to be examined in terms of Rule 5 of Cenvat Credit Rules read with notification issued there under. It is seen that the lower authorities has not deal with this issue. Lower authorities have gone into the admissibility of the Cenvat Credit already availed. In these circumstances, it is not possible to uphold the impugned order. If the lower authorities wanted to challenge the admissibility of credit, the same cannot be done while examining the refund claim of the appellant, without following the due process prescribed. 5. Notification No. 5/2006 has been issued under the said Rule. It is seen that Rule 5 and the Notification issued there under prescribed refund of Cenvat availed on (i) inputs and input and input services used in providing out put services payment of service tax, subject to conditions and limitations set out in Notification no.5/2006. In these circumstances, the only test of admissibility of refund can be the Rule 5 and notification issued there under. I find that the impugned order instead of dealing with this rule and notification issued there under, deals with the admissibility of credit itself. It is seen that for examining the 5 admissibility of credit a separate procedure have been provided under Rule 14 of the Cenvat Credit Rules. It is not open to Revenue to examine the admissibility of Cenvat Credit while adjudicating the admissibility of refund under Rule 5 read with Notification issued there under".
In the appellant's own case also, the said issue has been held in favour of them.
7. Following the same as well as appreciating the facts, I am of the view that the rejection of refund claim is without any basis and unjustified. The impugned order rejecting the refund claim on these services is set aside. The appeals are allowed with consequential relief, if any.
(Dictated and pronounced in open court) (Sulekha Beevi C.S.) Member (Judicial) Rex