Informatica Business Solutions Pvt. Ltd. Vs Commissioner of Central Tax (CESTAT Bangalore)
The CESTAT Bangalore allowed the appeals filed by Informatica Business Solutions Pvt. Ltd. against the partial rejection of refund claims under Rule 5 of the Cenvat Credit Rules, 2004. The appellant, engaged in providing Information Technology Software Services, customer support services, and marketing and sales support services to its overseas group entity, had claimed refund of accumulated Cenvat credit on export of services. The refund claims had been partly rejected on the grounds that the services were intermediary services, the Foreign Inward Remittance Certificates (FIRCs) were defective, and certain input services lacked nexus with the exported output services.
The Tribunal rejected the finding that the appellant’s services were intermediary services. Relying on its own earlier decision in the appellant’s case and several judicial precedents, it held that an intermediary merely arranges or facilitates the supply of goods or services between two or more persons, whereas the appellant was providing the main services on its own account to its overseas client. Since the recipient of the services was located outside India and consideration was received in convertible foreign exchange, the services qualified as export of services and refund could not be denied on the ground that they were intermediary services.
Regarding the FIRCs, the Tribunal noted that the Commissioner (Appeals) had observed that some FIRCs did not specifically mention the appellant’s name. As the appellant produced FIRCs before the Tribunal claiming they were proper, the matter was remanded to the original authority solely for verification of the FIRCs.
On the objection relating to nexus between input and output services, the Tribunal held that refund could not be denied merely because certain services such as sponsorship, insurance auxiliary, or event management services were considered unrelated. Relying on the Telangana High Court’s decision in Qualcomm India Pvt. Ltd., it observed that where the department had not disputed the availment of Cenvat credit under Rule 14, refund under Rule 5 could not be denied on the ground of nexus, particularly when the statutory formula for refund was satisfied.
Accordingly, the Tribunal held that the rejection of refund on the grounds of intermediary services and lack of nexus was unsustainable. The matter was remanded only for limited verification of the appellant’s name in the relevant FIRCs, with all other issues decided in favour of the appellant.
