Custom, Excise & Service Tax Tribunal
M/S Hcl Comnet Systems And Services Ltd vs Cc, Ce & St, Noida on 8 April, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/decision: 08.04.2015 For Approval and Signature: Honble Mr. Justice G. Raghuram, President 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of 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? Service Tax Appeal No. 51621 of 2014-SM (Arising out of order in appeal No. NOI/EXCUS/000/APPL/169/13-14 dated 26.08.2013 passed by the Commissioner (Appeals) Central Excise, Customs and Service Tax, Noida). M/s HCL Comnet Systems and Services Ltd. Appellant Vs. CC, CE & ST, Noida Respondent
Appearance:
Shri Manish Gaur, Advocate for the appellant Ms. Ranjana Jha, Jt. CDR for the Respondent Coram: Honble Mr. Justice G. Raghuram, President Final Order No. 51433/ 2015 Per: Justice G. Raghuram:
The appeal is preferred against the order dated 26.08.2013 passed by the Commissioner (Appeals) Central Excise, Customs and Service Tax, Noida partly allowing the appeal preferred by the assessee; granting refund of credit of service tax in respect of pest control service amounting to Rs.633/-; refund of charges relating to professional services concerning income tax assessment, of Rs. 10,300/-, (subject to verification of the relevant documents) but rejecting claim of refund of credit of service tax of Rs.21,42,757/-, paid by the appellant on immovable property taken on rent from its holding company M/s HCL Technologies Limited. A appeal was preferred against the adjudication order dated 30.04.2013 which rejected the claim for refund of service tax liability incurred in respect of renting of immovable properties; and two other elements, which were however allowed by the appellate Commissioner.
2. On 12.12.2012, appellant filed a refund claim, inter alia for refund of Rs.21,42,757/- being the service tax component remitted by the appellant to the holding company from whom it had sub-leased premises. The primary authority rejected this part of the claim on the ground that rent was paid through a debit note, which is not a proper document under the Central Excise Rules, 2002; that the rent pertains to the period July 2008 to June 2010 but was paid on 29.02.2012 and is hence barred by time; that the appellant failed to prove remittance of service tax to the Government exchequer; that one of the premises Arihant Building is not the registered premises in specified Form ST-2 which also does not contain the name of the building; and that the debit note is issued in the name of Arihant building while refund is claimed for service tax on inputs while the export is made much later i.e. during January 2012 to March 2012, in respect of rent pertaining to a much earlier period i.e. July 2008 to June 2010.
3. On appeal, the ld. appellate Commissioner reversed the conclusion by the primary Authority and held that a debit note could be used for availing credit in terms of Rule 4A of Service Tax Rules, 1994 and would be an admissible document for availing cenvat credit. The appellate Commissioner however confirmed the finding by the primary authority rejecting the claim for refund of Rs.21,42,757/-, on three premises, which are impeached in the appeal before the Tribunal.
4. Firstly, the appellate Commissioner held (concurring with the primary authority that since the rent pertains to the period July 2008 to June 2010 and service tax and the rent was remitted qua a debit note entry (on 29.02.2012), the transaction between M/s HCL Technologies Limited and the appellant cannot be said to be an arms length transaction since the lessor accepted payment of rent after two to three years. Therefore, the appellate Commissioner reasoned, debit notes are inadmissible and the claim should be supported by the other documents. The appellate Commissioner proceeded to observe that since the appellant failed to furnish a C.A. certificate to support the payments and since this was an extraordinary case and much delay had occurred in payment of rent, submission of ST-3 returns of the service provider are not sufficient.
5. The second reason adduced by the appellate Commissioner for rejecting this refund claim is that Arihant building is not the address mentioned in the Form ST-2 certificate; that the appellant provided a copy of the lease deed executed on 12.12.2011 which does not pertain to the lease period from July 2008 to June 2010 for which the rent was remitted by way of a debit note of M/s HCL Technologies Limited and therefore the appellate Commissioner agrees with the finding of the adjudicating authority that the premises was not the registered premises.
6. The third reason adduced by the appellate Commissioner for rejecting the refund is that though the only requirement for claiming refund under Cenvat Credit Rules, 2004 is that the service should qualify as input service and should be used for export of service, in the case on hand since the appellant had provided services that qualified as export during January 2012 to March 2012, while the rental service was in fact used for such export but since the rent was paid for an earlier period - July 2008 to June 2010, in 2012, in respect of the services exported during the period January 2012 to March 2012, the input service i.e. rent of the premises has no nexus with the output service exported during January 2012 to March 2012.
7. In our considered view the three reasons recorded by the appellate Commissioner for rejecting the claim for refund are unsustainable. On 23.02.2007, a lease deed was entered into between the owner of Sterling Tower, 327 Anna Salai, Chennai and M/s HCL Technologies Limited as the lessee, an expression deemed to include its successor and assigns. By a debit note in 2012 M/s HCL Technologies Limited entered a debit on the appellant for the rent for the period July 2008 to June 2009 in respect of Arihant building in Sterling Tower.
8. On 12.12.2011 M/s HCL Technologies Limited entered into a formal lease agreement to sub-lease the premises to the appellant for the period 01.04.2011 to 31.03.2015. A covenant in this lease deed specifically mentions that the lease deed dated 23.02.2007 under which M/s HCL Technologies Limited had obtained lease of the self-same premises is for the purpose of its normal and usual business under any of its subsidiary company/sister company as well; and that the appellant - M/s HCL Comnet Systems and Services Limited is a subsidiary company of M/s HCL Technologies Limited. The debit notes by M/s HCL Technologies Limited, copies of which are filed in the appeal also record debit entries in respect of rent for the premises as well as service tax and the cess thereon, evidencing that the appellant had been a lessee of the premises during the period for which the debit note was recorded. It is axiomatic and this position follows from Explanation (c) of Section 67 of the Finance Act, 1994, that M/s HCL Technologies Limited would be liable to remit service tax on the mere recording of a debit or credit notes in respect of a transaction with an associated enterprise, such as the appellant. As a corollary thereof, the payment of rent including the service tax component thereon by the appellant to M/s HCL Technologies Limited evidenced by the debit note constitutes proof of the appellant having incurred in service tax liability in respect of the lease of immovable property from M/s HCL Technologies Limited as a sub-lessee. The burden therefore shifts to the Revenue to establish that the debit note recorded by M/s HCL Technologies Limited is a fraudulent instrument not reflecting the true transaction between the parties. A mere suspicion, has been as recorded by the primary and appellate authority, that appellant had paid the rent two to three years after the period of which the premises was taken on lease is an unusual occurence, is not sufficient to displace the veracity of the debit note. This principle of law, that a suspicion however grave cannot be a foundation for a logical conclusion of fact, is well settled.
9. In the Form ST-2, the name of the premises is recorded as M/s HCL Comnet Systems & Services Limited, STP Unit and in the column pertaining to Road/ Street/ Lane it is recorded as Sterling Technopolis, Chennai. M/s HCL Comnet Systems & Services Limited is the name of the appellant and therefore it could not have been the name of the premises, clearly a typographical error. While this is so, an analyses of the debit note, the lease deed between the owner of the premises and M/s HCL Technologies Limited, dated 23.02.2007 and the sub lease deed between M/s HCL Technologies Limited and the appellant, dated 12.03.2011, leads to the singular inference that the appellant had taken the premises known as Sterling Tower under on lease from M/s HCL Technologies as a sub-lessee of the parent company and in respect of which a formal sub-lease was entered in 2011 and the appellant had remitted rent including the service tax component thereof for the earlier period from July 2008 to June 2010 qua a debit note dated 29.02.2012, recorded by M/s HCL Technologies Limited. This is the probable inference on an interactive analyses of the documents on record which probablise the claim of the appellant and negate what is recorded on behalf of the Revenue as a mere suspicion.
10. The other reason recorded by the learned Appellate Commissioner regarding the absence of a nexus between the input service, renting of premises and the admitted output service which is exported, is also unsustainable. Board Circular No. 120/01/2010-ST dated 19.01.2010, vide paragraphs 3.1.1 and 3.3 clearly enjoins that there is no requirement of a precise or a one-to-one correlation between an input service leading to an output service. The decisions of this Tribunal in Commr. of C. Ex. Vadodara vs. Transatlantic Packaging Pvt. Ltd. 2012 (278) ELT 353 (Tri. Ahmd.); Capiq Engineering Pvt. Ltd. vs. CCE, Vadodara 2011 (22) STR 366 (Tri. Ahmd.) and in CCE, Mysore vs. Chamundi Textiles (Silk Mills) Ltd. 2011 (270) ELT 531 (Tri. Bang.) uniformally expound the same principle, of the absence of a need for a one to one correlation between an input or output service. In the absence of any finding recorded by the authorities below that the renting of immovable property was not a service having any nexus whatsoever with the output service provided by the appellant, on the basis of any factual analyses, then is no justification for rejecting refund.
11. In the light of the fact that the premises in issue was the premises from which the appellant was operating is established by the debit note, by the lease deed of M/s HCL Technologies Limited and the sub-lease deed of the appellant, the preponderance of probabilities legitimises the conclusion that renting of immovable property was the input service utilised for the exported output service provided by the appellant.
12. On the aforesaid analyses, the impugned order is unsustainable and is accordingly quashed. The appeal is allowed the appellant is entitled to refund of service tax to the extent of Rs. 21,42,757/-. There shall be no order as to costs.
(Justice G. Raghuram) President Pant