2024 (4) TMI 473 - AT - Service Tax

EOU entitled to cenvat credit refund under Rule 5 for input services with business nexus per pre-2011 definition

M/s. BNY Mellon Technology Pvt. Ltd. Versus The Commissioner of CGST & Central Excise, Chennai

CESTAT Chennai ruled on 100% EOU's refund claim for unutilized cenvat credit under Rule 5 of Cenvat Credit Rules, 2004. The tribunal held that pre-2011 ... 100% EOU - Refund of the unutilized cenvat credit - Rule 5 of the Cenvat Credit Rules, 2004 - denial of refund on the ground that the appellant has not established the nexus of input services with the output services provided by them - rejection of refund also on the ground that there was mismatch of the figures of the refund claims and the cenvat credit as disclosed in the relevant ST-3 returns - rejection of some amount of refund on the ground that the premises is unregistered - interest on delayed refund - CENVAT Credit - nexus with output service. Denial of refund on the ground that the appellant has not established the nexus of input services with the output services provided by them - HELD THAT:- The definition of ‘input service’ prior to 1.4.2011 had wide ambit as it included the words “activities relating to business”. Further, in case of output services provider as per first limb of definition of ‘input services as given in Rule 2(l ) of CCR 2004, it is merely sufficient to establish that input services were used for providing output services. The first limb of the definition does not use the words ‘directly’ and merely says ‘inputs used for providing output services’. The finding of the Commissioner (Appeals) that the appellant has not established that input services were directly used for providing output service is adding words into the definition of “input service” and therefore not acceptable. The appellant therefore is eligible for the refund of credit of input service prior to 1.4.2011. The finding of the adjudicating authority that the refund is not eligible for the reason that the input service did not have nexus with the output service is set aside. Denial of refund on the ground of difference in the amount of the cenvat credit disclosed in the ST-3 returns and the refund of credit filed by the appellant for the relevant period - HELD THAT:- On perusal of records, it is not forthcoming as to which of the services this difference in amount is spread over. For this reason, it is opined that the matter requires to be remanded. In case the appellant is able to furnish that they have availed these input services of higher amount, the original authority is directed to consider as per law and as per findings rendered in this order. Rejection of some amount of refund on the ground that the premises is unregistered - HELD THAT:- The Hon’ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] has held that credit cannot be denied for the reason that the premises is not registered. Following the same, we are of the view that rejection of refund claim on this grounds is not justified - there is difference in amounts as reflected in the ST-3 returns as well as refund claim as discussed above, the entire matter requires to be remanded to the adjudicating authority to reconsider afresh, the claims which have been rejected. Interest on delayed refund - HELD THAT:- There is difference in the amount of the refund claim and the amount of credit disclosed in the ST-3 returns. All these require much correlation and consideration by the adjudicating authority. For these reasons, we do not find any ground to grant interest as there is not much delay in sanctioning refund. The issue of interest on delayed refund is held against the appellant and in favour of the Department. The matter is remanded to the adjudicating authority for reconsideration in above terms within a period of three months from the date of receiving this order. The impugned orders are set aside. The appeals are allowed by way of remand to the adjudicating authority. CENVAT Credit - input service - having nexus with output service or not - Renting of Immovable Property Services (Parking Service) - Air Travel Agency Service - Photography Service - Management Consultancy Service - Commercial or Coaching Service - Event Management Service - Supply of Tangible Goods service - out of pocket expenses - Security agency services - Pandhal & Shamina Services - HELD THAT:- The services described in the table furnished by appellant do not fall under the exclusion clause of definition of input services (post-1.4.2011). The department therefore cannot reject the refund alleging that the services do not have nexus with output services - For this period post-1.4.2011 also, there is difference in the amount of refund claim as well as the amount of credit disclosed in the ST-3 returns. For these reasons, these appeals also require to be remanded to the adjudicating authority for reconsidering the issue of refund. In such consideration of the matter, the original authority is directed to verify the invoices as well as the services of the air travel agency service, photography services, as to whether these are used for personal consumption. If they are used for the activity of the company the appellant would be eligible for credit - appeals also stand allowed by way of remand to the adjudicating authority. Appeals allowed by way of remand. Issues Involved:The issues involved in the judgment are the eligibility of the appellant for refund of unutilized cenvat credit u/s Rule 5 of the Cenvat Credit Rules, 2004 for different periods, rejection of refund claims by the original authority, mismatch of figures in refund claims and ST-3 returns, denial of refund due to unregistered premises, and the eligibility for interest on delayed refund.Issue 1 - Eligibility for Refund (Prior to 1.4.2011):The appellant, a 100% EOU providing various services, filed refund claims for unutilized cenvat credit. The Commissioner (Appeals) upheld the rejection of refund, stating that the appellant failed to establish the nexus of input services with the output services. However, the Tribunal found that the definition of 'input services' prior to 1.4.2011 was broad and included 'activities relating to business.' The Tribunal held that the appellant is eligible for the refund of credit of input service prior to 1.4.2011, setting aside the finding of the adjudicating authority regarding the absence of nexus with the output service.Issue 2 - Mismatch of Figures and Premises Registration:The second issue pertains to the mismatch of figures between the refund claims and the cenvat credit disclosed in the ST-3 returns. The Tribunal directed a remand for further verification. Additionally, the rejection of some refund amount due to unregistered premises was deemed unjustified by the Tribunal, citing precedents. The entire matter was remanded for reconsideration by the adjudicating authority.Issue 3 - Interest on Delayed Refund:Regarding the interest on delayed refund, the appellant claimed interest citing delays in the refund process. However, the Tribunal noted that there were deficiency memos issued to the appellant and differences in refund claims and ST-3 returns, leading to a remand for further consideration. Ultimately, the Tribunal ruled against granting interest on delayed refund due to lack of significant delay in sanctioning the refund.Separate Judgment for Appeals Post-1.4.2011:For the period April 2011 to September 2011, the appellant claimed refund for various services. The Tribunal found that the services did not fall under the exclusion clause of the definition of input services post-1.4.2011. The matter was remanded for reconsideration by the adjudicating authority, with specific instructions to verify certain services for eligibility. The Tribunal allowed these appeals by way of remand with specific observations.In conclusion, the Tribunal set aside the impugned orders and remanded all appeals to the adjudicating authority for reconsideration within a specified period, providing detailed reasons and directions for each issue involved.