2024 (3) TMI 1286 - AT - Service Tax

CENVAT credit refund denied for ITSS services without valid export order but allowed for other eligible services

M/s Agilent Technologies Private Limited Versus The Commissioner of Service Tax, Delhi

CESTAT Chandigarh remanded the case to the Original Authority for reconsideration. The appellant was denied refund of CENVAT credit on ITSS services as no ... Refund of CENVAT Credit - services related to Information Technology (ITSS) - export of services or not - eligibility to avail CENVAT credit when the supplier of services pays service tax on a mistaken notion of law - credit can be denied for the difference in the ST-3 Returns and CENVAT credit Register or not. Whether the appellants are eligible for claiming refund on the ITSS Services claimed to have been rendered to M/s Agilent Technologies, Singapore? - HELD THAT:- On going through the agreement, one gets understanding that the same are not in the field of ITSS. An addendum of a later date cannot be construed to be an order valid during the relevant period. Therefore, there was no specific order placed by M/s Agilent Technologies, Singapore, on the appellant, for providing ITSS Services during the relevant period. It is found that the addendum and the certificate issued much later than the impugned period that to after rejection of the refund cannot take place of an “Order” as envisaged in the proviso to Rule 3(1)(iii) of Export of Service Rules, 2005. It is found that the argument of the appellants that development of Software Services rendered by the appellants is linked to the R & D Agreement is not acceptable. The appellants have also taken the plea that prior to 16.05.2008, they have claimed refund of Business Support Services and not in respect of ITSS Services and thus, partial refund claim was wrongly rejected to the tune of Rs.2,81,87,493/-. This claim needs to be verified from the records by the Adjudicating Authority. Though, it is held that during the relevant period, the appellants are not entitled to refund of CENVAT credit on services utilized for ITSS Services, they would be eligible for the refund of CENVAT credit on services utilized for other services, if otherwise, applicable. For this reason, it is found that the matter requires to go back to the Original Authority. Whether the appellants are eligible to avail CENVAT credit when the supplier of services pays service tax on a mistaken notion of law? - HELD THAT:- As there is no dispute regarding the fact of duty being paid on the generator, credit cannot be disallowed at the service receiver”s end. Learned Authorized Representative for the Department submits that all the cases cited by the appellant are in the realm of Central Excise and therefore, not applicable to the issue of service tax. This proposition cannot be accepted. The basic principle of CENVAT credit being same under Central Excise & Service Tax regime, any differentiation in this regard would be artificial. Whether the credit can be denied for the difference in the ST-3 Returns and CENVAT credit Register? - HELD THAT:- Appellant submitted that learned Commissioner has not given any findings on the same - In the case of M/s Temenos India Pvt. Ltd. [2020 (2) TMI 354 - CESTAT CHENNAI], the Tribunal held Further I find that the Commissioner (Appeals) in the impugned order has observed that the appellants have not submitted any 11 documents to prove their contention that they have rightly availed the cenvat credit. It appears that both the authorities have not examined all the documents which have been filed by the appellant in support of their refund claim. In view of this, I set aside the impugned order and remand the matter back to the original authority to examine the refund claim on the basis of other documents filed by the appellant. Refund cannot be rejected for the reason that there is a discrepancy between the CENVAT record and ST-3 Returns. However, the submissions of the learned Authorized Representative, agreed upon, that the same can be allowed only if records maintained by the appellants demonstrate that the input services were used/ utilized for the export of services - the issue requires to travel back to the Original Authority for a re-consideration in view of our findings as above. The appeal is allowed by way of remand to the Original Authority. Issues Involved:1. Eligibility for claiming refund on ITSS Services rendered to M/s Agilent Technologies, Singapore.2. Eligibility to avail CENVAT credit when the supplier of services pays service tax on a mistaken notion of law.3. Denial of credit due to discrepancies between ST-3 Returns and CENVAT credit Register.Summary:1. Eligibility for claiming refund on ITSS Services:The appellants contended that the services rendered should qualify as export under Rule 3 of the Export of Service Rules, 2005. The Tribunal found that M/s Agilent Technologies (International) Pvt. Ltd. and M/s Agilent Technologies, Singapore are independent entities and not commercial establishments of each other. However, the Tribunal agreed with the Commissioner that no specific order was placed by M/s Agilent Technologies, Singapore for ITSS Services during the relevant period. The Tribunal concluded that the addendum and certificate issued after the relevant period cannot be construed as an order valid during the period in question. Despite this, the Tribunal held that refund cannot be denied without raising a demand for service tax on the appellants, citing the case of Black Rock Services (India) Pvt. Ltd.2. Eligibility to avail CENVAT credit on service tax paid on the generator:The Tribunal agreed with the appellants that credit cannot be denied if the supplier has paid service tax, even if it was not due. The Tribunal cited cases like CCE Pune vs. Ajinkya Enterprises, holding that once duty is paid, credit cannot be denied. The Tribunal dismissed the Department's argument that the principle is only applicable to excisable goods and not to service tax.3. Denial of credit due to discrepancies between ST-3 Returns and CENVAT credit Register:The Tribunal found that the Commissioner did not provide any findings on this issue. Citing the case of M/s Temenos India Pvt. Ltd., the Tribunal held that non-disclosure of CENVAT credit in ST-3 returns alone is not a valid reason to deny credit. The Tribunal remanded the matter back to the Original Authority to verify if the services were used for export.Conclusion:The appeal was allowed by way of remand to the Original Authority with the following terms:- The appellants did not meet the conditions of Proviso to Rule 3(1)(iii) of Export of Service Rules, 2005 for ITSS Services, but refund is admissible as no demand was raised.- The Original Authority should verify and allow the refund of Rs.2,81,87,493/- for Business Support Services for the period October 2007 to March 2008 if found admissible.- The appellants are eligible for CENVAT credit on the service tax paid on the generator.- Refund is admissible despite discrepancies between CENVAT credit records and ST-3 Returns, provided the services were procured on payment of tax and used in the provision of exported services.