CESTAT Chennai: Refund claim allowed for pre-registration service tax credit under Cenvat Credit Rules

The Appellate Tribunal CESTAT CHENNAI affirmed the eligibility of respondents for a refund claim under Rule 5 of Cenvat Credit Rules, 2004 for unutilized service tax credit availed before their registration. The Tribunal held that registration of the assessee's premises is not a prerequisite for claiming such credit or refund, citing relevant case law precedents. The department's appeal was dismissed, upholding the Commissioner (Appeals)' decision in favor of the respondents.

---

---

Issues: Refund claim under Rule 5 of Cenvat Credit Rules, 2004 for unutilized service tax credit availed before registration.

In this judgment by the Appellate Tribunal CESTAT CHENNAI, the issue revolved around a refund claim filed by the respondents under Rule 5 of Cenvat Credit Rules, 2004 for unutilized service tax credit availed before their registration as service providers. The respondents, engaged in Business Auxiliary Service (BAS), Business Support Service (BSS), and Information Technology Software Service, had taken registration post the receipt of services covered by invoices, subsequently exporting the services. The original authority rejected the refund claim citing ineligibility due to the credit availed before registration. However, the Commissioner (Appeals) allowed the appeal relying on precedent from Textech International (P) Ltd. The department appealed against this decision.

During the hearing, the Revenue reiterated their grounds of appeal, emphasizing the ineligibility of the respondents to claim a refund for pre-registration credit. Notably, the Tribunal referred to the judgment of the Hon’ble High Court in BNP Paribas Sundaram Global Securities Operations Pvt. Ltd., which clarified that registration of the assessee’s premises is not a prerequisite for claiming credit or refund under Rule 5 of CCR, 2004. This position was supported by various case laws, including CST, Chennai Vs. CESTAT, Chennai, mPortal India Wireless Solutions Pvt. Ltd., and CST, Chennai Vs. Verizon Data Services India Pvt. Ltd. The Tribunal highlighted that recent decisions, including the one in BNP Paribas Sundaram Global Securities Operations Pvt. Ltd., reiterated the stance that Rule 5 of CCR, 2004 does not mandate premises registration for refund claims. Citing the earlier decision in M/s. Scioinspire Consulting Services India Pvt. Ltd., the Tribunal dismissed the department’s appeal, finding no merit in their arguments. The appeal was consequently dismissed, affirming the respondents' eligibility for the refund claim.

---