2018 (10) TMI 27 - AT - Service Tax

Appellate Tribunal grants refund of unutilized Cenvat credit for essential input services

The Appellate Tribunal CESTAT Bangalore allowed the assessee's appeal, granting the refund of unutilized Cenvat credit of service tax along with interest ... 100% EOU - Refund of unutilized CENVAT Credit - Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.05/2006-CE(NT) dt. 14/03/2006 - various input services - scope of SCN - Held that:- The appellant is a 100% EOU and is engaged in the Business Process Outsourcing, Call Centre etc. which are liable to service tax under BAS/BSS. For rendering the export service, the appellant utilized various input services and has taken the credit of the same and thereafter filed refund claim under N/N. 5/2006 which was partially allowed by the sanctioning authority - the definition of input service as contained in Rule 2(l) of CENVAT Credit Rules is very wide. All the input services have been held to be input services by various case laws - Further the period involved in the present appeal is prior to 01/04/2011 where the definition of input service was very wide and exhaustive as held in various decisions. The assessee is entitled to the refund of ₹ 72,26,910/- along with applicable interest for the delay in grant of the refund - appeal dismissed - decided against Revenue. Issues involved:1. Refund claim of unutilized Cenvat credit of service tax.2. Scope of input services under Rule 2(l) of CENVAT Credit Rules, 2004.3. Interest on delayed payment of refund claim.4. Department's appeal against the refund sanctioning.Detailed Analysis:1. The judgment involves two appeals, one by the assessee and the other by the Department, against the impugned order passed by the Commissioner(Appeals) regarding the refund claim of unutilized Cenvat credit of service tax. The Order-in-Original sanctioned a partial amount, leading to appeals by both parties.2. The key issue revolves around the interpretation of the definition of input services under Rule 2(l) of CENVAT Credit Rules, 2004. The appellant contended that the denied input services, such as rent-a-cab, cleaning service, BAS, and others, are essential for their business activities and fall within the ambit of input services as defined. The appellant relied on various case laws to support their claim, emphasizing the inclusive nature of the definition and the indirect usage criterion for CENVAT credit eligibility.3. Another aspect discussed in the judgment is the entitlement to interest on delayed payment of the refund claim. The appellant argued that Section 11BB mandates interest on delayed refunds, citing relevant legal precedents to support their claim.4. The Department's appeal contested the sanctioning of the refund on specific services, arguing that those services were not related to exports and, therefore, not eligible for a refund. However, the Tribunal found merit in the appellant's arguments, noting that the appellant, being a 100% EOU engaged in taxable services, had utilized various input services for export activities, making them eligible for the refund under the applicable rules and notifications.5. Ultimately, the Tribunal allowed the assessee's appeal, setting aside the impugned order and granting the refund along with applicable interest for the delay. The Department's appeal was dismissed as the input services in question were deemed eligible based on established legal precedents and the broad definition of input services under the relevant rules. The judgment was pronounced on 01/08/2018 by the Appellate Tribunal CESTAT Bangalore, with detailed analysis and references to legal provisions and case laws supporting the decisions.