2018 (8) TMI 1438 - AT - Service Tax

Tribunal grants refund on exported services, emphasizing procedural rights over violations

The Tribunal allowed the appeal for refund of unutilized service tax on exported services, overturning the Commissioner(Appeals)'s decision. The Tribunal ... Refund of unutilized service tax paid - output services that are exported in terms of Rule 6A of the Service Tax Rules - Denial of refund on the ground that certain documents have not been filed. Held that:- The services of consulting engineering have been rendered from Bangalore unit where the appellant has been registered as service provider. It is also a fact that the registered office of the company situated at Pune and they have a centralized registration for Pune office and has also obtained ISD registration at Pune w.e.f. 11/05/2008 and copy of these registrations have been placed on record - It is also clear that these input services were received at Bangalore unit but the payments have been made from Pune bank account which is the Head Office of the appellant. It is also a fact that FIRCs have been received at Pune for the services rendered from Bangalore unit of the appellant. In the case of Mahindra & Mahindra Ltd. [2015 (1) TMI 1086 - CESTAT MUMBAI], it was observed by the Tribunal that when the invoices in the name of the company were issued in the name of branch office and the payments were accounted at the Head Office having ISD registration, then there is no legal infirmity. Rejection of refund not justified - appeal allowed - decided in favor of appellant. Issues:Refund of unutilized service tax on exported services.Analysis:The appellant, engaged in manufacturing and providing services, filed for a refund of service tax on input services used for exported services. The Deputy Commissioner rejected the refund citing various grounds, including failure to submit necessary documents and lack of proof of export of services. The Commissioner(Appeals) upheld the rejection, stating that the appellant's Bangalore unit did not have centralized registration and that payments for input services were made from the Pune office. The appellant argued that the Bangalore unit was part of the centralized registration at Pune and all payments were made centrally due to internal control processes. The appellant cited judicial precedents supporting their claim. The Revenue contended that the export of services from the Bangalore unit was not established. The Tribunal noted that the services were rendered from Bangalore, but payments were made from Pune, the Head Office. Citing precedents, the Tribunal held that when invoices are in the name of the company's branch office and payments are accounted at the Head Office, credit availed is legal. The Tribunal also emphasized that procedural violations cannot result in denying substantive rights. Referring to relevant cases, the Tribunal set aside the Commissioner(Appeals)'s decision, allowing the appeal and potentially granting consequential reliefs.