Custom, Excise & Service Tax Tribunal
Texas Instruments (India) Pvt Ltd vs Bangalore-Ltu on 17 March, 2025
ST/2616/2010
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 2616 of 2010
(Arising out of Order-in-Original No.56/2010 dated 07.09.2010
passed by the Commissioner of Central Excise and Customs, Large
Tax Payer Unit, Bangalore.)
Texas Instruments (India) Pvt.
Ltd.,
Bagmane Tech Park, Appellant(s)
No. 66/3, Adjacent to LRDE,
Byrasandra C.V. Raman Nagar Post,
Bangalore - 560 093.
VERSUS
Commissioner Large Tax Payer
Bangalore
JSS Towers, 100ft Ring Road, Respondent(s)
Banashankari III Stage, Bangalore - 560 085.
APPEARANCE:
Ms. Meghna Lal with Ms. Vani, Advocates for the Appellant Mr.P. Saravana Perumal, Addl. Commissioner(AR) for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS R BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 20309 /2025 DATE OF HEARING:18.09.2024 DATE OF DECISION:17.03.2025 PER : DR. D.M. MISRA This is an appeal filed against Order-in-Original No.56/2010-(Commr.) dated 07.09.2010 passed by the Commissioner of Central Excise and Customs, LTU, Bangalore.Page 1 of 6
ST/2616/2010
2. Briefly stated the facts of the case are that the appellant is a 100% Software EOU, registered under the Software Technology Park scheme of Government of India for export of services. The appellant, during the relevant period from April 2007 to May 2008, had discharged service tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 in respect of the services received from M/s. Texas Instruments Inc., USA viz. Management of Business Consultancy Service, Management, Maintenance and Repair Service, Information Technology Software Service (ITSS) (June 2008 onwards), Management Consultancy Service (June 2008 onwards) and availed cenvat credit amounting to Rs.14,06,03,251/-. Alleging that the output services provided by the appellant viz. ITSS till 15.05.2008 are not eligible for availing credit in terms of the Cenvat Credit Rules, show-cause notice was issued to the appellant on 09.09.2009 for recovery of the said credit amount of Rs.14,06,03,251/- along with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal.
3.1. At the outset, the learned advocate for the appellant has submitted that the appellant is engaged in the business of semiconductor design and developing software for use in the semiconductor devices. The appellant maintained a design and software development facilities in Bangalore which was established for the purpose of developing new semiconductor related software. They entered into a Software Development Agreement dated 28.03.2005 with their overseas company M/s. Texas Instruments Inc., USA wherein the appellant developed semiconductor designs and semiconductor related software for the group. Also, the appellant had entered into a Marketing Services Agreement dated 11.04.2005 with M/S. Texas Instruments, Singapore wherein the appellant provides marketing services and other sales administrative and sales Page 2 of 6 ST/2616/2010 support services with respect to the products sold by the said Singapore company in India. For undertaking the development of said software, the appellant utilised various input services procured from the local service provider, holding company and other group companies established outside India as well as for domestic companies. They discharged service tax on the domestic services under Section 66 of the Finance Act, 1994 and services received from outside India under Section 66A of the Finance Act, 1994 read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994. The total amount of Rs.14,06,03,251/- was paid as service tax on input services, which they availed cenvat credit.
3.2. She has submitted that during the period April 2007 to May 2008, the appellant had filed four refund claims for the quarters April to June 2007, July 2007 to December 2007, January 2008 to March 2008 and April 2008 to May 2008 for claiming the accumulated cenvat credit in terms of Rule 5 of the Cenvat Credit Rules, 2004. The said refund claims were rejected by the Department solely on the ground that the credit availed the appellant is ineligible as the output services provided by the appellant was not taxable prior to 16.05.2008. Aggrieved by the said rejection of refund claims, the appellant approached this Tribunal and by Final order No.21794-21798/2014 dated 26.09.2014, this Tribunal has remanded the matter to the adjudicating authority for de novo adjudication.
3.3. Since the refund claims were rejected, consequently, the present proceeding was initiated by issuing show-cause notice dated 09.09.2009 demanding the alleged inadmissible credit of Rs.14,06,03,251/-. She has submitted that the Hon'ble CESTAT relying upon the para 6.12 of the Interim Order No.79-152/2014 dated 29.08.2014 in the case of Apotex Research Pvt. Ltd. & Ors. Vs. CC, Bangalore & Ors., held that the decision of the Page 3 of 6 ST/2616/2010 Hon'ble Karnataka High Court in the case of mPortal India Wireless Solutions Vs. CST, Bangalore [2012(27) STR 134 (Kar.)] is squarely applicable and observed that the rejection of the refund claim on the ground that the output services is not taxable is not sustainable. During the de novo proceedings, the learned Commissioner sanctioned the refund claims vide Order- in-Original No.220R/2017-LTU dated 04.05.2017. It is her contention that since the cash refund has already been sanctioned, the issue stands settled by way of allowing the refund claims by the Department of the accumulated crredit; therefore the issue is no longer res integra and the Hon'ble Tribunal earlier had examined the issue and settled it in appellant's favour by upholding that the refund of credit cannot be rejected on the ground that the output services provided by the appellant being ITSS were not taxable during the relevant period. She has submitted that the refund has already been sanctioned to the appellant and the issue of eligibility of credit has already been put to test; therefore the credit of Rs.14,06,03,251/- is admissible and the impugned order is liable to be set aside. Further, in support of her contention, she has referred to the judgment of the Karnataka High Court in the following cases:-
i. Kyocera Wireless Pvt. Ltd. Vs. CST, Bangalore [2014(9) TMI 1036 - CESTAT BANGALORE] ii. Kyocera Wireless (India) Pvt. Ltd. Vs. CST, Bangalore [2017(3) GSTL 401 (Tri. Bang.)] iii. Novarties Healthcare Private Limited Vs. CCGST&CE [2023(9) TMI 455 - CESTAT Mumbai] iv. Wipro Technologies Vs. CST [2020(9) TMI938-CESTAT Bangalore] v. KPIT Cummins Infosystems Ltd. Vs. CCE, Pune-I [2013(7) TMI 124 - CESTAT Mumbai] vi. PSI Data Systems Ltd. Vs. CST, Bangalore [2017(8) TMI 636 - CESTAT Bangalore] 3.4. She has also submitted that extended period of limitation cannot be invoked in the present case as they have already filed Page 4 of 6 ST/2616/2010 refund claims on quarterly basis; hence all the facts were within the knowledge of the Department.
4. Learned AR for the Revenue reiterated the findings of the learned Commissioner.
5. Heard both sides and perused the records.
6. The short issue involved in the present appeal is whether the cenvat credit of Rs.14,06,03,251/- availed by the appellant during April 2007 to May 2008 be recoverable under the Cenvat Credit Rules, 2004.
7. Undisputed facts are that the appellant is a 100% EOU registered under the STPI scheme and during the relevant period, pursuant to the agreement entered into with the overseas companies viz. M/s. Texas Instruments Inc., USA and M/s. Texas Instruments, Singapore, they have exported software services and rendered services to the overseas companies.
Since there was no clearance to the domestic market and entire services were exported, the appellant had filed cash refund claims of accumulated cenvat credit of Rs.14,06,03,251/- on quarterly basis during the period April 2007 to May 2008. Under Rule 5 of Cenvat Credit Rules, 2004 Initially the said refund claims were rejected on the ground that the output services provided by them became taxable only w.e.f. 16.05.2008; hence the cenvat credit availed itself is inadmissible.
8. From the records and submissions, we find that the matter has reached this Tribunal and this Tribunal following the ratio laid down in the case of mPortal India Wireless Solutions (supra), remanded the matter to the adjudicating authority for de novo consideration. In the de novo proceeding, the adjudicating authority allowed the cash refund claims for the Page 5 of 6 ST/2616/2010 period April 2007 to May 2008. In such circumstances, the demand which arose consequent to the rejection of the refund, in our opinion, cannot be sustained. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Order pronounced in court on 17.03.2025) (D.M. MISRA) MEMBER (JUDICIAL) (R BHAGYA DEVI) MEMBER (TECHNICAL) Raja...
Page 6 of 6