2017 (3) TMI 69 - AT - Service Tax

Tribunal allows appeals, remands case for reassessment under CENVAT Credit Rules

The Tribunal ruled in favor of the appellant, allowing the appeals and remanding the case for further consideration. The rejection of refund claims under ... Refund under Rule 5 of CENVAT Credit Rules, 2004 - Centralized registration and billing under Rule 4 of the Service Tax Rules, 1994 - SOFTEX return disclosure and its evidentiary value - Definition of input service and inclusive explanation - Nexus between input services and exported output services - Remand for verification and quantification of refund claimsCentralized registration and billing under Rule 4 of the Service Tax Rules, 1994 - SOFTEX return disclosure and its evidentiary value - Refund under Rule 5 of CENVAT Credit Rules, 2004 - Whether the rejection of refund claims solely because export turnover relating to Business Auxiliary Services (BAS) was not disclosed in the monthly SOFTEX filed with STPI and invoices were raised only from the Bangalore unit is sustainable - HELD THAT: - The Tribunal held that denial of refund solely on the ground that BAS export turnover from the Gurgaon unit was not disclosed in the SOFTEX is not sustainable. Rule 4 of the Service Tax Rules, 1994 permits centralized registration where centralized accounting and billing are maintained; raising export invoices only from the Bangalore unit does not by itself establish that no export took place from Gurgaon. The Tribunal therefore treated non-disclosure in SOFTEX as an insufficient legal basis to reject the refund claim and directed that the original authority shall examine all documents produced by the appellant to prove export from Gurgaon before passing a fresh order. [Paras 6, 7]Findings rejecting refund for lack of SOFTEX disclosure are set aside; appeals allowed by way of remand for fresh consideration of evidence proving export from Gurgaon and for fresh adjudication.Definition of input service and inclusive explanation - Nexus between input services and exported output services - Remand for verification and quantification of refund claims - Whether the services including parking and cafeteria rent; building maintenance and housekeeping; bookkeeping; financial services; internet and telephone services constitute input services qualifying for refund - HELD THAT: - The Tribunal accepted the appellant's contention, relying on earlier decisions, that the listed services are necessary for running the business and fall within the wide inclusive scope of the definition of input service (for example services used in relation to premises, maintenance, modernization etc.). Consequently, these services were held in principle to be input services for the purpose of refund claims. The Tribunal, however, remanded the matter to the adjudicating authority to verify documents tendered by the appellant, satisfy other statutory conditions and quantify the refund in accordance with Board Circular No.120/01/2010-ST dated 19.1.2010. [Paras 6, 7]In principle the listed services are held to be input services and appellant is entitled to refund subject to verification; appeals allowed by way of remand for document verification and quantification.Final Conclusion: All appeals are allowed by way of remand: the Tribunal set aside the rejection based solely on SOFTEX non-disclosure, held in principle that the listed services are input services, and directed the original authority to re-examine the appellant's evidence of export from the Gurgaon unit and to quantify the refundable amount in accordance with applicable circulars and conditions. Issues:Refund claims under Rule 5 of CENVAT Credit Rules, 2004 rejected due to lack of export from Gurgaon unit and nexus between input and output services.Analysis:The appellants filed 15 appeals against the rejection of refund claims under Rule 5 of CENVAT Credit Rules, 2004 due to the absence of exports from the Gurgaon unit and the alleged lack of nexus between input services received and output services exported. The Commissioner (A) had dismissed the claims, leading to the current appeals consolidated under a common order.The appellant, a private limited company, engaged in exporting ITSS and BAS to its parent company, filed various refund claims under Rule 5 of CCR read with Rule 5 of 2006. The Assistant Commissioner of Service Tax rejected the claims stating no export occurred from the Gurgaon unit, and the nexus between input and output services was not established. The Commissioner (A) upheld these rejections, prompting the appeals.During the hearing, the appellant argued that the orders contravened legal precedents and statutory provisions. They highlighted centralized registration at the Bangalore unit, where export invoices were raised despite services being provided from both locations. The appellant contended that services like maintenance, repairs, and other rejected input services fell within the broad definition of input services, citing relevant case law.The respondent reiterated the lower authorities' findings, emphasizing the lack of evidence supporting exports from the Gurgaon unit and non-disclosure of BAS turnover in the monthly SOFTEX filings. However, the Tribunal found the rejection of refunds based on non-disclosure of BAS turnover and the lack of nexus to be legally unsustainable.The Tribunal ruled in favor of the appellant, noting that export invoices from the Bangalore unit were permissible under Rule 4 of the Service Tax Rules, 1994. It found that BAS from the Gurgaon unit was not disclosed in SOFTEX due to its non-registration as a Software Technology Park. The Tribunal held that the rejected input services were essential for business operations and fell within the definition of input services based on cited decisions.Consequently, the appeals were allowed, remanding the case for further consideration. The original authority was directed to assess export documents from the Gurgaon unit and quantify the refund claims in line with the Tribunal's findings and relevant conditions specified in a Board Circular.In conclusion, the Tribunal's decision favored the appellant, emphasizing the legality of centralized billing, the necessity of rejected input services, and the need for proper consideration of export documentation for refund claims.