2011 (11) TMI 303 - AT - Service Tax

Tribunal upholds refund claim on unutilized CENVAT credit, stresses nexus between input and output services

The Tribunal rejected the department's appeal, upheld the refund claim of unutilized CENVAT credit by the respondent, and disposed of the condonation of ... Power of the Commissioner (Appeals) to remand – 100% EOU registered under the category of 'Business Auxiliary Service' - refund claimed of unutilized CENVAT credit – Held that:- The Commissioner (Appeals) has examined and found nexus between the input services (viz bandwidth services, IT enabled services, Security agency services, outdoor catering services and renting of immovable property) and the output services. In effect, the Commissioner (Appeals) has not remitted any issue on merits to be decided by the original authority. It is basically for quantification purposes based on the Chartered Accountant's certificate as envisaged in the Board's Circular No. 120/1/2010 dated 19.1.2010. - Decided against the Revenue. Issues:1. Condonation of delay in filing appeal.2. Stay petition.3. Refund of unutilized CENVAT credit.4. Commissioner (Appeals) powers of remand.5. Nexus between input services and output services.6. Scope of input services.Condonation of Delay:The appellant filed an appeal within three months of receiving the order of the Commissioner (Appeals). The application for condonation of delay was disposed of as infructuous.Stay Petition:The Tribunal decided to dispose of the appeal finally considering the nature of the issue, and thus, the stay petition was also treated as disposed of.Refund of Unutilized CENVAT Credit:The respondent, a 100% E.O.U., claimed a refund of unutilized CENVAT credit amounting to Rs. 5,78,260 for the period from April 2008 to September 2008. The Commissioner (Appeals) held that the refund is admissible, emphasizing that non-registration under a particular category is not a bar for refund.Commissioner (Appeals) Powers of Remand:The department challenged the Commissioner (Appeals) order, arguing that he had no power of remand. However, the Tribunal held that the Commissioner's action was not a remand but a request for quantification of the refund, making the department's argument irrelevant.Nexus Between Input Services and Output Services:The Tribunal examined the nexus between the input services claimed by the respondent and the services rendered. The Commissioner (Appeals) provided detailed findings on the essential nature of services like Bandwidth Services, IT Enabled Services, Security Agency Services, Outdoor Catering Service, and Renting of Immovable Property Service, supporting the refund claim.Scope of Input Services:The Tribunal rejected the department's appeal, emphasizing the relative nature of input services. It was noted that the Commissioner (Appeals) correctly determined the input services based on their nexus with the services provided by the respondent, with no valid grounds presented to interfere with the Commissioner's order on merit.In conclusion, the Tribunal rejected the department's appeal, upheld the refund claim, and disposed of the COD application and stay petition. The judgment highlighted the importance of establishing a nexus between input services and output services for refund claims and clarified the scope of input services based on the nature of the services provided.