CENVAT refund and revision bar: credit linked to business premises was allowed, while parallel revisional action was held impermissible.
CENVAT credit refund was allowed where service tax had been paid on maintenance charges, ground-floor rent and rent paid to a co-owner for premises used to provide exported output services, because the services were directly linked to the business premises and minor registration defects were treated as curable; the denial was held hyper-technical. Revisional action under Section 84 of the Finance Act, 1994 was also held unavailable where the same issue was already pending in appeal before the first appellate authority, since the statutory bar operated once appellate proceedings had commenced. The revisionary orders therefore could not survive.
Issues: (i) Whether the assessee was entitled to refund of unutilized CENVAT credit attributable to service tax paid on maintenance charges, rent for the ground floor, and rent paid to a co-owner of the premises used for output services; (ii) Whether the Commissioner could exercise revisional power under Section 84 of the Finance Act, 1994 in respect of an issue that was already pending in appeal before the first appellate authority.
Issue (i): Whether the assessee was entitled to refund of unutilized CENVAT credit attributable to service tax paid on maintenance charges, rent for the ground floor, and rent paid to a co-owner of the premises used for output services.
Analysis: The premises were admittedly taken on rent and used for providing exported output services. The maintenance charges, including car parking and apartment upkeep, were directly connected with the rented premises used for business, and the service tax paid thereon had been discharged by the service provider. The omission to include the ground floor in the centralized registration certificate was treated as a curable defect, since the ground floor was in fact used for rendering output services and the rent paid thereon had suffered service tax. As regards rent paid to the co-owner, documentary evidence showed that invoices were issued under the service tax law with registration particulars and tax charged, and the arrangement of issuing cheques in two names did not displace the fact that the tax had been paid on a service actually received. A refund denial on such grounds was held to be hyper-technical.
Conclusion: The assessee was entitled to the refund and the related CENVAT credit claims were allowed.
Issue (ii): Whether the Commissioner could exercise revisional power under Section 84 of the Finance Act, 1994 in respect of an issue that was already pending in appeal before the first appellate authority.
Analysis: The revisional power could not be used where the same issue was already in appeal, because the statutory bar under Section 84 operated once the issue formed part of the appellate proceedings. The cited precedent on identical facts was applied to hold that revisional jurisdiction was unavailable while the appeal remained pending, and the contrary reliance placed by the Revenue was found inapposite.
Conclusion: The revisional orders were without jurisdiction to the extent they dealt with the pending appellate issue.
Final Conclusion: The impugned revisionary orders could not survive, and the assessee succeeded on both merits and jurisdiction.
Ratio Decidendi: CENVAT credit refund cannot be denied on a hyper-technical basis where the input service tax is demonstrably linked to premises used for output services, and revisional jurisdiction is barred under Section 84 of the Finance Act, 1994 once the same issue is already pending in appeal.
TaxTMI 
AI Drafter ✕
TaxTMI 
