Aon Specialist Services Private Limited Vs Commissioner of Service Tax (CESTAT Bangalore)
The appeal before the CESTAT Bangalore concerned refund of CENVAT credit paid on input services for the period April to December 2007. The appellant, Aon Specialist Services Private Limited, had paid service tax on its input services and filed a refund claim. The refund was rejected on grounds including that the recipient of the service provided by the appellant was in India and therefore the services could not be treated as export of service, absence of correlation between export invoices and Foreign Inward Remittance Certificates (FIRCs), and limitation. The rejection was upheld in appeal, leading to the present proceedings.
The appellant submitted that the show-cause notice dated 23.05.2008 did not allege delay in filing the refund claim or that the services provided by the appellant were not exports. According to the appellant, rejection on those grounds in the impugned order travelled beyond the scope of the show-cause notice. Reliance was also placed on Board Circular No.112/06/2009-ST dated 12.03.2009, which prescribed guidelines for considering refund claims and did not require one-to-one correlation between export invoices and remittances where FIRCs were issued on a consolidated basis.
On the question of nexus between input and output services, the appellant relied upon Rule 5 of the CENVAT Credit Rules, 2004 and the decision of the Telangana High Court in CCE v. Qualcomm India Pvt. Ltd. The appellant also relied upon M/s. Societe Generale Global Solutions Pvt. Ltd. v. Commissioner of Service Tax, Bangalore and BT (India) Private Limited v. Union of India & Anr. to contend that the export character of the services could not be questioned at the refund stage in the manner adopted by the authorities.
Regarding limitation, the appellant relied on Notification No.27/2012 dated 18.06.2012-CE (N.T.) and the decision in CCE & CST, Bengaluru v. Span Infotech (India) Pvt. Ltd., submitting that, for export of services, the relevant date for computing the limitation period was the end of the quarter in which the FIRC was received. Reliance was also placed on the Karnataka High Court decision in M/s. Suretex Prophylactics India Pvt. Ltd. & Anr. v. CCE, Bangalore.
The Revenue contended that the appellant obtained service tax registration only on 17.07.2007, whereas export invoices were raised on 31.03.2007 and 18.12.2007. It was also submitted that an inward remittance had been received on 17.10.2006, before the relevant invoices, and that the FIRCs dated 05.10.2007 were produced to overcome the one-year limitation period. The Revenue further contended that there was no correlation between the exported services and the inward remittances.
In rejoinder, the appellant submitted that registration was not mandatory and that a substantial refund right could not be denied for a procedural lapse. The appellant again relied on Board Circular No.112/06/2009-ST dated 12.03.2009, particularly the clarification dealing with consolidated FIRCs. The appellant also submitted that the finding that the recipients’ names and addresses were not furnished was factually incorrect because the invoices contained the relevant details.
The Tribunal found it to be an admitted fact that the appellant had exported the service and furnished evidence regarding inward remittances. In relation to the alleged absence of correlation, the Tribunal relied upon the Board’s Circular dated 12.03.2009, which specifically directed that one-to-one correlation should not be insisted upon when considering refund claims. On the alleged absence of nexus between input and output services, the Tribunal followed the Telangana High Court’s decision in Qualcomm India Pvt. Ltd., which held that where availment of CENVAT credit under Rule 3 had not been questioned, denial of refund under Rule 5 by seeking to dispute the nexus of input services without proceedings under Rule 14 could not be justified.
The Tribunal also relied upon the Delhi High Court’s decision in BT (India) Pvt. Ltd. on the issue of export of services. The High Court had observed, as quoted in the order, that unless the self-assessed return had been questioned, reopened or reassessed and the assertion that the services qualified as export of service had been questioned or negatived in accordance with the prescribed procedure, the refund claim could not be negated. The Tribunal consequently accepted the appellant’s contention concerning the export character of the services.
On limitation, the Tribunal followed Span Infotech, which held that export of services is completed upon receipt of consideration in foreign exchange and that the FIRC date is relevant. It further followed the principle that, for refund claims filed quarterly, the relevant date for purposes of Rule 5 of the CENVAT Credit Rules could be taken as the end of the quarter in which the FIRC was received. The Tribunal also relied upon the Karnataka High Court’s decision in Suretex Prophylactics, which held that the relevant date for computing the limitation period was the end of the quarter in which the FIRCs were received in the circumstances considered therein.
Following the above decisions and the Board’s Circular, the Tribunal held that the appellant was entitled to refund of unutilised CENVAT credit. The impugned order was set aside and the appeal was allowed with consequential relief, if any, in accordance with law. The order was pronounced in Open Court on 13.08.2025.
Cases Discussed
- CCE v. Qualcomm India Pvt. Ltd. – Telangana High Court
- M/s. Societe Generale Global Solutions Pvt. Ltd. v. Commissioner of Service Tax, Bangalore – CESTAT Bangalore
- BT (India) Private Limited v. Union of India & Anr. – Delhi High Court
- CCE & CST, Bengaluru v. Span Infotech (India) Pvt. Ltd. – CESTAT Bangalore
- M/s. Suretex Prophylactics India Pvt. Ltd. & Anr. v. CCE, Bangalore – Karnataka High Court
- ITC Limited – Supreme Court
- Vatika Township – Supreme Court
- Hyundai Motors – Andhra Pradesh High Court
FULL TEXT OF THE CESTAT BANGALORE ORDER
The issue in the present appeal is regarding refund of cenvat credit paid on input services. Appellant had paid service tax on their input services and filed refund claim for the period from April to December 2007. However, alleging that since the recipient of service, provided by the appellant is in India, it cannot be considered as Export of Service. Further, it is alleged that there was no correlation with the export invoices and the FIRCs. In appeal also, the rejection of refund claim was upheld. Aggrieved by said order, present appeal is filed.
2. When the appeal came up for hearing, the learned Chartered Accountant (CA) drew our attention to the show-cause notice dated 23.5.2008 and submits that there is no allegation in the show-cause notice regarding delay in submitting claim or as service provided by the appellant are not export. However, in the impugned order, it is rejected on such ground and it is beyond the scope of show-cause notice. The learned CA further submits that Board vide Circular No.112/06/2009-ST dated 12.03.2009 issued specific guidelines to consider the refund claims and not to insisting for one-to-one correlation of the exports. As regarding the findings related to nexus between input and out service, he further submits that said issue is also settled by the Hon’ble High Court of Telangana in the case of CCE vs. Qualcomm India Pvt. Ltd.: 2021 (11) TMI 72 – Telangana High Court. The learned CA also drew our attention to the refund application, invoices, balance sheet as submitted before the adjudicating authority. However, as per the finding of the adjudicating authority, it is held that details of the recipients (names and address are not furnished), the said finding is factually incorrect and as evident from the invoices, entire details of the recipient of service are available. As regarding finding of the adjudicating authority that the activity of the appellant does not satisfy Rule 3(2)(a) of the Export of Service Rules, 2005; the learned CA submitted that the said finding is also factually wrong and unsustainable. In this regard, learned CA drew our attention to the decision of this Tribunal in the case of M/s. Societe Generale Global Solutions Pvt. Ltd. vs. Commissioner of Service Tax, Bangalore: 2023 (8) TMI 699 – CESTAT-BANGALORE wherein it is held that while considering the refund claim under Rule 5 of the Cenvat Credit Rules, the adjudicating authority have no right to challenge the Export of Service as contemplated under Rule 6A of the Service Tax Rules, 1994. The learned CA further referred to the judgment of Hon’ble High Court of Delhi in the case of BT (India) Private Limited vs. Union of India & Anr.: 2023 (11) TMI 478 – Delhi High Court.
2.1 As regarding the relevant date and rejection of the claim on limitation, the learned CA drew our attention to the entry in the balance sheet and submits that as per theNotification No.27/2012 dated 18.6.2012-CE (N.T), the relevant date for computation of time limit will be end of the quarter for which FIRCs are received. The issue is also covered by the decision of Tribunal in the case of CCE & CST, Bengaluru vs. Span Infotech (India) Pvt. Ltd.: 2018 (2) TMI 946 – CESTAT Bangalore. Learned CA also further submitted that the issue is settled by the judgment of Hon’ble High Court of Karnataka in the case of M/s. Suretex Prophylactics India Pvt. Ltd. & Anr. vs. CCE, Bangalore: 2020 (5) TMI 225 – Karnataka High Court.
3. The learned Authorised Representative (AR) for the Revenue reiterated the findings in the impugned order. Learned AR further drew our attention to the document evidencing registration of the appellant and submits that the appellant had obtained service tax registration only on 17.7.2007 and the export invoices were raised on 31.3.2007 and 18.12.2007. However, appellant had received inward remittance on 17.10.2006 which is much before the above said date of invoice. Production of the FIRCs dated 5.10.2007 is only to overcome the time limit of one year period from the date of export. Learned AR also drew our attention to the FIRCs produced by the appellant and submits that there is no correlation between the service exported by the appellant and the inward remittance.
4. In rejoinder, the learned CA for the appellant submits that as held in large number of cases, registration is not mandatory and in the absence of registration, substantial right cannot be denied as it is only a procedural lapse. Learned counsel also drew our attention to the Boar’s Circular No. No.112/06/2009-ST dated 12.03.2009 and referred to the relevant issue, which is reproduced below:
| Sl. No. | Issue Raised | Clarification |
|---|---|---|
| III | For exporters, exporting to customer regularly, the foreign exchange remittance certificates (FIRC) are made on running account basis by the banks. Therefore, it is often not possible to show the linkage between the export invoice and the remittance. This has resulted in denial of refund. Further, in case where payments are received by cheque, banks do not issue FIRC and refunds are denied. | In such cases, where FIRCs are issued on consolidated basis, the exporters should submit self- certified statement along with FIRC showing the details of export in respect of which the FIRC pertains. Refunds should be allowed on such certified statements. However, exporters should maintain a register showing running account which should be reconciled between the export and the remittance periodically. In cases where banks do not issue FIRC for the reason that payments are received by cheque, refund may be allowed on the basis of duty certified bank statement. |
4.1 Learned CA also submits that though the adjudicating authority rejected the claim on different grounds, the first appellate authority had rejected the appeal on the ground that the activity carried out by the appellant cannot be considered as Export of Service since condition laid down in Rule 3(2)(a) of Service Tax Rules, 2005 is not satisfied.
5. Heard both sides. It is an admitted fact that the appellant had exported the service and also furnished evidence regarding inward remittances. As regarding the objections made by the adjudicating authority regarding lack of correlation, we find that as per the instructions issued by the Board vide Circular No.112/06/2009-ST dated 12.03.2009, specific guidelines are issued that when refund claims are considered, not to insist for one-to-one correlation of the exports. As regarding the finding related to nexus between input and out service is also, the said issue is settled by the Hon’ble High Court of Telangana in the case of CCE vs. Qualcomm India Pvt. Ltd. where it is held that:
“16. As the availment of cenvat credit by the appellant under Rule 3 of the Rules is not called in question, the denial to grant refund under Rule 5 of the Rules without there being any proceedings initiated under Rule 14 of the Rules by seeking to deny the refund on the ground of the respondent/assessee availed cenvat credit on input services, which according to the appellant/revenue have no nexus with the output service. In our considered view, cannot be held to be justified.”
6. With regard to the issue whether the services rendered by the appellant amounts to export of service, the Hon’ble High Court of Delhi in the case of BT (India) Pvt. Ltd. (supra), observed that:
“66. In our considered view, unless the self-assessed return, as submitted had been questioned, re-opened or re-assessed and the assertion of the petitioner of the services rendered by it qualifying as an ‘export of service’ questioned or negatived in accordance with the procedure prescribed under the Act, its claim for refund could not have been negated. As was observed by the Supreme Court in ITC Limited, a self-assessed return also amounts to an ‘assessment’ and unless it is varied or modified in accordance with the procedure prescribed under the relevant statute, the same cannot possibly be questioned in refund proceedings. As the Supreme Court had held in the decisions aforenoted, the authority while considering an application for grant of refund neither sits in appeal nor is it entitled to review an assessment deemed to have been made. In fact, the Supreme Court in ITC Limited had described refund proceedings to be akin to execution proceedings.”
6.1 With regard to the relevant date and rejection of the claim on delay, this issue is also settled by the decision of this Tribunal CCE & CST, Bengaluru vs. Span Infotech (India) Pvt. Ltd. (supra) wherein it has held that:
“11. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provisions constructively so as to give its meaning such that the objective of the provisions; i.e. to grant refund of unutilized Cenvat credit, is facilitated. By reference to the Service Tax Rules, 1994 as well as the successor provisions i.e. the Export of Services Rules, 2005, we note that export of services is completed only with receipt of the consideration in foreign exchange. Consequently, the date of Foreign Inward Remittance Certificate (FIRC) is definitely relevant. The Hon’ble Andhra Pradesh High Court has held that the date of receipt of consideration may be taken as relevant date in the case of Hyundai Motors [2015 (39) S.T.R. 984 (A.P.)].
12. ……….
13. Revenue has expressed the view that relevant date in the case of export of services may be adopted on the same lines as the amendment carried out in the Notification No. 27/2012, w.e.f. 1-3-2016. Essentially, after this amendment the relevant date is to be considered as the date of receipt of foreign exchange. While this proposition appears attractive, we are also persuaded to keep in view the observations of the Hon’ble Supreme Court in the case of Vatika Township (supra), in which the Constitutional Bench has laid down the guideline that any beneficial amendment to the statute may be given benefit retrospectively but any provision imposing burden or liability on the public can be viewed only prospectively. Keeping in view the observations of the Apex Court, we conclude that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.”
6.2 Further, issue of time bar has also been settled by the judgment of Hon’ble High Court of Karnataka in the case of M/s. Suretex Prophylactics India Pvt. Ltd. & Anr., wherein it has been held that:
“13. In the instant case, the appellant has obtained registration under the provisions of Finance Act, 1994 in the category of service provider as “scientific and technical consultancy services”. As the entire taxable services rendered by the appellant for exporting outside India and on account of appellant not having any domestic service tax liability, the input service credit availed by it on the taxable input services, received by it remained unutilized. Hence, appellant sought for refund of this unutilized input credit under Rule 5 of CENVAT Credit Rules, 2004 by submitting 16 refund claims. Said applications came to be rejected as not having been filed within the limitation prescribed under Section 11B of the Central Excise Act. While answering substantial questions of law (1), (3) & (4) hereinabove, we have already held that provisions of Section 11B of Central Excise Act would be applicable though Section 11B of the Act does not cover refund of Cenvat credit, Notification No. 5/2006 makes it explicitly clear that for the purpose of relevant date for computing one year prescribed under Section 11B, it has to be determined by applying Rule 5 of Cenvat Credit Rules, 2004, necessarily the refund claims ought to have been filed within one year from the relevant date as specified in Section 11B. In other words, time-limit has to be computed from the last date of the last month of the quarter which would be the relevant date for the purposes of examining if the claim is filed within the limitation prescribed under Section 11B or otherwise. The details of the refund claims insofar as it relates to 12 claims was on 3-1-2014 had been filed beyond one year from the last date of the last month of the quarters and as such, they were clearly time-barred. Insofar as remaining 4 claims, matter has been remanded to the original authority, against which there is no appeal by the revenue. Hence, we answer the substantial question of law No. 2 that Tribunal was right in holding that the “relevant date for computation of time- limit will be the end of the quarter” in which FIRC’s are received as per the extant Notification No. 27/2012-C.E. (N.T.), dated 18- 6-2012.”
Following the ratio of the above decisions and the guidelines issued by the Board as per the above said Circular, appellant is entitled for refund of unutilised CENVAT credit. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any, in accordance with law.
Order pronounced in Open Court on 13.08.2025.)
