2018 (6) TMI 339 - AT - Service Tax

Court clarifies refund eligibility criteria under Rule 5 of CCR, 2004 based on payments received, not invoices raised.

The court allowed the appeal, emphasizing the correct interpretation of Rule 5 of CCR, 2004 and Notification No. 27/2012-CE(NT) in determining refund ... Refund of unutilized CENVAT credit - Business Support Service - Business Auxiliary Service - period involved is from July, 2014 to September, 2014 - Rule 5 of CCR, 2004 and N/N. 27/2012-CE (NT) dated 18.06.2012 - Held that:- A plain reading of Rule 5 of CCR, 2004 makes it clear that when it defines export turnover of services, the assessee needs to consider only the payments received during the relevant period and certainly not the payments which are to be received for which invoices are raised during that period. The appellate authority has even though not disputed most of the findings of the adjudicating authority, only holds that the requirement of law is that the exports effected during the relevant quarter for which proceeds were be received in foreign currency in the same quarter. This is certainly not the intention of the legislation. The order of the ld. Commissioner (Appeals) in denying the refund granted by the original authority is wrong and unsustainable - the order of the adjudicating authority is restored - appeal allowed. Issues Involved:Claim of refund of un-utilized Cenvat credit under Rule 5 of CCR, 2004 and Notification No. 27/2012-CE (NT) dated 18.06.2012 for the period from July, 2014 to September, 2014.Detailed Analysis:1. Refund Claim Dispute:The appellant, a service provider under 'Business Support Service and Business Auxiliary Service,' sought a refund of un-utilized input service credit for the period from April 2014 to June 2014. The adjudicating authority sanctioned only a portion of the claim, leading to an appeal by the Revenue. The Commissioner (Appeals) set aside the refund, prompting the appellant's appeal. The issue before the court was the denial of a refund of Rs. 70,058 only, as the appellant did not contest the rejection of a part of the claim. The Commissioner rightly noted the absence of provision for cross-objection in the appeal.2. Legal Arguments:The appellant's counsel argued that for service providers exporting services without service tax payment, a refund of unutilized input credit is allowed. The appellant, engaged in BAS & BSS, emphasized the applicability of Rule 5(D)(1) of CCR, 2004, which considers export proceeds realized during the relevant quarter as export turnover. The counsel highlighted discrepancies between export proceeds realized and invoices raised during the period, citing the impossibility of realizing payments for invoices raised in the same quarter.3. Analysis of Evidence:The court examined tables showing export proceeds realized and invoices raised, noting the variance in amounts. The Commissioner's rejection was based on the requirement that exports and proceeds be received in foreign currency during the same quarter, a stance deemed impractical and contrary to legislative intent. The court referenced Rule 5(D)(1) of CCR, 2004 and Notification No. 27/2012-CE(NT) to support its position that payments received, not invoices raised, determine export turnover.4. Decision and Rationale:The adjudicating authority's thorough analysis and satisfaction with the refund claim were contrasted with the Commissioner's emphasis on foreign currency proceeds received during the relevant quarter. The court found the Commissioner's interpretation erroneous and reinstated the adjudicating authority's order, allowing the appeal and restoring the refund claim.5. Conclusion:The court allowed the appeal, emphasizing the correct interpretation of Rule 5 of CCR, 2004 and Notification No. 27/2012-CE(NT) in determining refund eligibility based on payments received, not invoices raised, during the relevant period. The judgment was pronounced on 05.06.2018.