2018 (5) TMI 612 - AT - Service Tax

Tribunal remands case for re-evaluation, directs accurate verification of invoices and correct formula for refund claims.

M/s. NXP Semiconductors India Pvt. Ltd. Versus The Commissioner of Central Tax- IV North Commissionerate, Bangalore

M/s. NXP Semiconductors India Pvt. Ltd. Versus The Commissioner of Central Tax- IV North Commissionerate, Bangalore - TMI Issues Involved:1. Not a speaking order.2. Order is contrary to allegations made in show-cause notice.3. Export of service under the category of Business Auxiliary Services (BAS).4. Inconsistencies in computation of eligible amount of refund.5. Procedural non-compliances.6. CENVAT credit availed for unregistered business premises.7. Input services having nexus with the output.Issue-wise Detailed Analysis:1. Not a Speaking Order:The appellant contended that the impugned order lacked detailed reasoning and failed to address the factual and legal positions adequately, making it unsustainable in law.2. Order Contrary to Allegations Made in Show-Cause Notice:The appellant argued that the rejection of refund claims was beyond the scope of the show-cause notice, particularly concerning the export turnover of Business Auxiliary Services (BAS). The show-cause notice did not raise concerns over the non-consideration of services under BAS as export services.3. Export of Service under the Category of Business Auxiliary Services (BAS):The appellant provided services such as marketing the goods of foreign group companies to potential customers, which they claimed fell under the definition of 'Export' under Rule 6A of Service Tax Rules, 1994, read with Rule 3 of the Place of Provision of Service Rules, 2012. The appellant fulfilled all conditions for export without payment of service tax, including the recipient being located outside India, the place of provision of service being outside India, and consideration received in convertible foreign exchange. The appellant cited multiple tribunal decisions supporting their claim that these services qualify as export services.4. Inconsistencies in Computation of Eligible Amount of Refund:The appellant highlighted an apparent error in the computation of the eligible refund amount by the Deputy Commissioner, who did not follow the prescribed formula under Rule 5 of CENVAT Credit Rules, 2004. The term 'Net CENVAT Credit' should be applied correctly, as defined, without deducting credit utilized during the quarter. The appellant provided evidence of correct computations for subsequent periods and requested reconsideration by the original authority.5. Procedural Non-Compliances:Refunds were denied due to non-submission of certain invoices or incomplete invoices. The appellant contended that they had submitted all necessary invoices and were willing to produce them again if the matter was remanded. They argued that substantive rights should not be denied due to procedural non-compliances.6. CENVAT Credit Availed for Unregistered Business Premises:Refunds were rejected because invoices were addressed to unregistered premises. The appellant cited a Karnataka High Court decision stating that registration is not a prerequisite for claiming CENVAT credit and provided proof of registration. The tribunal held that the refund was wrongly rejected on this ground.7. Input Services Having Nexus with the Output:The appellant challenged the rejection of refunds for various input services, including Event Management Service, Business Exhibition Service, and Convention Services, arguing that these services are integrally connected with their output services. They cited multiple tribunal decisions supporting their claims. For Real Estate Agents and Supply of Tangible Goods services, the appellant did not press the issue due to the small amounts involved.Conclusion:The tribunal found merit in the appellant's arguments on several grounds and remanded the matter back to the original authority for re-evaluation. The original authority was directed to verify invoices and other documents and apply the correct formula for determining the refund claims based on the tribunal's findings.Order Pronounced:The order was pronounced in open court on 03.05.2018.