2019 (7) TMI 1418 - AT - Service Tax

Appellant's Services Qualify as Export; Nexus Between Input and Output Services Examined

Samsung R&D Institute India Bangalore Pvt. Ltd. Versus C.C.E & C.S.T. -Bangalore Service Tax- I

The Tribunal found that the appellant's services qualified as export of service as the recipient was located outside India and payment was received in ... 100% EOU registered with STPI - Refund of accumulated CENVAT Credit - denial of refund on the ground of nexus - Rule 5 of Cenvat Credit Rules 2004 read with N/N. 5/2006 CE (NT) - export of services or not - refund barred for technical reasons such as incomplete forms, inadequate data, difference in figures etc. or not. Whether the service rendered by the appellant is export of service? - HELD THAT:- The appellants are exporting services in relation to Information Technology Software. The recipient is undisputedly Samsung Korea which is outside India. The appellants are receiving the renumeration for the services rendered in foreign exchange. Therefore, we find that the activity undertaken by appellants amounts to export of services. It is understood that the Department does not dispute the claim of export of services by the appellants. We find that the appellants have submitted a declaration given by Samsung, Korea stating that these services were used by them for the purpose of its business outside India. However, the learned authorized representative submits that this certificate was not produced before the Commissioner (Appeals) - Therefore, it would be in the interest of justice that the matter should go back to the learned Commissioner (Appeals) to appreciate the evidence submitted by the appellants in this regard. Whether some of the input services which are disputed have nexus with the output service provided by the appellants? - HELD THAT:- The appellants have given elaborate submissions on the applicability of such services as settled by various decisions - the entire issue of nexus between the input service and output service has been clarified by CBEC Circular 120/01/2010 – ST and the case-law cited by the appellants. In view of the above, the issue of examining nexus in respect of each of the input service requires to be seen in the light of ratios of judgments by Tribunal and higher Courts and the circulars issued by the Board - For this purpose also the matter requires to be remanded to the lower authorities. Whether refund will be barred on technical reasons such as incomplete forms, inadequate data, difference in figures etc. - HELD THAT:- As long as the refund claim is in order and necessary documents as required as per law and as long as there is no dispute about the eligibility of the particular service to be eligible for refund, minor discrepancies should not be a hindrance. Appeal allowed by way of remand. Issues Involved:1. Whether the service rendered by the appellant qualifies as export of service.2. Whether the disputed input services have a nexus with the output service provided by the appellants.3. Whether refunds can be denied on technical grounds such as incomplete forms, inadequate data, or discrepancies in figures.Issue-wise Detailed Analysis:1. Whether the service rendered by the appellant qualifies as export of service:The appellants, a 100% EOU registered with STPI, are engaged in providing Research and Development Services related to Information Technology Software to Samsung Electronics Corporation Technology Solutions, Korea. They filed refund claims under Rule 5 of the Cenvat Credit Rules 2004, which were partially allowed and partially disallowed by the original adjudicating authority due to a lack of nexus with the exported services. The Commissioner (Appeals) required documentary evidence, such as a utilization certificate from the customers, to prove that the services were used and enjoyed outside India.The appellants argued that the Export of Service Rules, 2005, only require that the service be provided from India and used outside India, and payment be received in convertible foreign exchange. They cited precedents like Paul Merchants Ltd. Vs. CCE and Microsoft Corporation India Pvt. Ltd. Vs. CST, New Delhi, where it was held that services provided by an Indian company qualify as export if the service recipient is located outside India and the benefit accrues outside India. CBEC Circular No. 111/05/2009-ST further clarifies that for services under Category III [Rule 3(1)(iii)], the location of the service receiver is relevant, not the place of performance.The Tribunal found that the appellants' services qualify as export since the recipient, Samsung Korea, is outside India, and the remuneration is received in foreign exchange. The appellants submitted a declaration from Samsung, Korea, stating that the services were used for business outside India. The matter was remanded to the Commissioner (Appeals) to appreciate the evidence submitted by the appellants.2. Whether the disputed input services have a nexus with the output service provided by the appellants:The appellants argued that there is no need to establish a direct nexus between input services and output services at the time of filing a refund claim, as held in Apotex Research Pvt. Ltd. Vs. CC, Bangalore and CCE Vs. Ultratech Cement Ltd. The Tribunal noted that various input services like Renting of Immovable Property, Cafeteria, Car Parking, Business Support Services, and others have been settled in favor of the appellants in several cases, such as M-Portal (I) Wireless Solutions P. Ltd. Vs. CC, ST, Bangalore and IPC Software (I) P. Ltd. Vs. CCE, Pune III.The Tribunal acknowledged the detailed submissions and case laws provided by the appellants for each disputed input service. The issue of nexus between input and output services requires examination in light of the judgments by the Tribunal and higher courts and the circulars issued by the Board. Therefore, the matter was remanded to the lower authorities for a fresh examination.3. Whether refunds can be denied on technical grounds such as incomplete forms, inadequate data, or discrepancies in figures:The Tribunal held that minor discrepancies in invoices, forms, or figures should not hinder the refund claim as long as the claim is in order and the necessary documents are provided. The eligibility of the particular service for a refund should not be disputed based on such minor procedural issues.Conclusion:The Tribunal set aside the impugned orders in all 11 appeals and remanded the matter to the original authority for fresh consideration. The appellants were directed to submit all requisite information and data within four weeks of receiving the order. The original authority was instructed to examine all evidence, records, and submissions and decide the refund claims as per law within four weeks of the appellants' submission.