2018 (9) TMI 175 - AT - Service Tax

SEZ Unit entitled to refund of CENVAT credit despite VCES payment

CC. S.T. - ST-Ahmedabad Versus M/s Oxygen Bio Research P Ltd

The Tribunal held that the respondent, a Special Economic Zone (SEZ) Unit, was entitled to the refund of accumulated CENVAT credit for service tax paid on ... SEZ Unit - Refund of accumulated CENVAT of input service - rejection on the ground that since the amount of service tax on which CENVAT credit was availed was paid under VCES Scheme, in terms of Section 109 of Finance Act, 2013, any amount paid in pursuance of declaration made under sub section 1 of section 107 was not refundable under any circumstances - Held that:- Any service tax paid of the input service whether under VCES Scheme or otherwise the same is available as CENVAT credit to the assessee. Once the CENVAT credit is legally admissible it is available either for utilization for payment of service tax/excise duty - In the present case the appellant being SEZ Unit is entitled for the refund of CENVAT credit under N/N. 12/2013-ST. - the case of the respondent does not fall under section 109 of the Finance Act, 2013, accordingly, the respondent is rightly entitled for the refund of CENVAT credit availed by them under N/N. 12/2013-ST. - appeal dismissed - decided against Revenue. Issues:Refund of accumulated CENVAT of input service under Notification 12/2013-ST after payment under VCES Scheme.Analysis:The case involved a dispute regarding the refund of accumulated CENVAT of input service under Notification 12/2013-ST after payment under the Voluntary Compliance Encouragement Scheme (VCES). The respondent, a Special Economic Zone (SEZ) Unit, had declared service tax liability under the VCES Scheme for services received from abroad, paid the service tax under reverse charge mechanism, and then availed CENVAT credit of the tax paid. The adjudicating authority rejected the refund claim citing Section 109 of the Finance Act, 2013, which stated that amounts paid under the VCES Scheme were not refundable under any circumstances. The respondent appealed to the Ld. Commissioner (Appeals), who allowed the appeal, leading to the Revenue's appeal.The Revenue argued that according to Section 109 of the Finance Act, 2013, amounts paid under the VCES Scheme could not be refunded, and thus, the refund was rightly rejected. On the other hand, the respondent contended that they were entitled to CENVAT credit for the service tax paid on input service even under the VCES Scheme, as clarified by circulars issued by the Board. They argued that the refund fell under a specific provision of the SEZ Act, overriding other acts, and was rightly allowed by the Commissioner.Upon careful consideration, the Tribunal found that the refund was not related to the service tax paid under the VCES Scheme but rather to the CENVAT credit for the service tax paid. The Board's circular clarified that the respondent was legally entitled to the CENVAT credit for the service tax paid on a reverse charge basis for the input service, regardless of whether it was paid under the VCES Scheme or otherwise. The CENVAT credit was available for utilization for payment of service tax or excise duty. As the appellant was an SEZ Unit, they were entitled to the refund of CENVAT credit under Notification No. 12/2013-ST. Therefore, the Tribunal held that the case did not fall under Section 109 of the Finance Act, 2013, and the respondent was rightfully entitled to the refund of CENVAT credit. Consequently, the impugned orders were upheld, and the Revenue's appeals were dismissed.