Place of Provision Rules: refund denial for alleged taxable service failed where rule 4 was unsupported and rule 3 applied.

Refund of accumulated CENVAT credit could not be denied on the basis that the services were taxable in India under rule 4 of the Place of Provision of Services Rules, 2012, because the record contained no finding that goods had been supplied to the appellant for rendering the service. In the absence of those foundational facts, rule 4 was inapplicable and rule 3 governed the place of provision. The absence of any demand on the alleged taxable service also made denial of refund as a non-export unsustainable, and the scope of the show cause notice could not be enlarged. The refund claim was therefore directed to be reconsidered by the original authority.

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Issues: Whether the refund claim could be denied on the basis that the appellant had rendered taxable services under rule 4 of the Place of Provision of Services Rules, 2012, and whether the applicable rule was rule 3 instead.

Analysis: Refund of accumulated CENVAT credit had been rejected on the premise that the activity was taxable in India under rule 4 of the Place of Provision of Services Rules, 2012. The record did not show that any goods had been supplied to the appellant for rendering service, and there was no allegation or finding in the lower orders to that effect. In the absence of such foundational facts, rule 4 could not be invoked. The Tribunal also noted that no demand had been raised in relation to the alleged taxable service, which made the denial of refund as non-export untenable. The attempt to enlarge the scope of the show cause notice was not accepted.

Conclusion: The denial of refund was unsustainable, rule 3 of the Place of Provision of Services Rules, 2012 applied, and the matter was sent back to the original authority for fresh processing of the refund claim.

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