Microsoft Research Lab India Private Limited Vs Commissioner of Central Tax (CESTAT Bangalore)
CESTAT find that the appellant has given detailed justification for each of the impugned services involved in these two appeals with judicial precedents and the impugned services have been used by the appellant for rendering the output services. Further, I find that the reasoning given by the Commissioner(A) in the impugned orders is not correct in law and the correct position in law is that to test for eligibility is whether input services is used by the provider of taxable service for providing output service and the input services should not be covered by the exclusion clause. Further, I find that all these services on which refund has been rejected consistently held to be input services in various decision relied upon by the appellant cited supra. Moreover, the Department has not questioned the input service at the time when the CENVAT credit was taken and as per the decision of this Tribunal in the case of K Line Ship Management Pvt. Ltd. vs. CGST cited supra wherein it has been held that the department is not permitted to question the eligibility of CENVAT credit at the time of claiming refund. Further, in view of the clarification given by the tax research unit of CBEC vide their letter dated 16.3.2012, the amended Rule 5 of CENVAT Credit Rules, does not require correlation between the output service exported and the input service used in such output service exported. This has also been held in various decisions by the Tribunal cited supra. Therefore, by following the ratio of the various decisions cited supra, I allow both the appeals of the appellants and hold that the appellant is entitled to refund of CENVAT credit along with interest in view of the apex court decision in the case of Ranbaxy Laboratories Ltd. vs. UOI cited supra along with many other decisions rendered by the Tribunal.
FULL TEXT OF THE CESTAT BANGALORE ORDER
Appellants have filed these two appeals against two impugned orders dated 25.08.2021 and 20.08.2021 vide which the Commissioner (A) has rejected the refund claims on various input services. Since the issue involved in both the appeals are identical, therefore, both the appeals are taken up together for disposal.
2. Briefly the facts of the present case are that the appellant is a company registered under the Companies Act and is a wholly owned subsidiary of Microsoft Corporation, USA. They have entered into an agreement with M/s. Microsoft Corporation, USA as per which the appellant is required to undertake Information Technology related research and development activities. Appellant is engaged in providing Information Technology Services and Information Technology Enabled Services (ITES). Undisputedly, the said services qualify as export of service. Appellant is also registered under the Service Tax for taxable Information Technology Software Services and Business Auxiliary Services as service provider and also registered as service recipient for taxable Manpower Recruitment Service, Sponsorship Service, Commercial Training and Coaching Service, Legal Consultancy, etc. Appellant procured various input services which were utilised in provision of output service and tax paid thereon was claimed as CENVAT credit in terms of Rule 2(l) read with Rule 3 of the CENVAT Credit Rules. Since the services provided by the appellant qualify as an export of service, appellant filed periodical refund claims under Rule 5 of CENVAT Credit Rules read with Notification No.5/2006-CE (NT) and Notification No.27/2012-CE(NT) dated 18.6.2012 as applicable for seeking refund of accumulated CENVAT credit.
2.1 In the first round of litigation, the learned original authority partially sanctioned and rejected some amount of refund claims filed by the appellant. Being aggrieved by the rejection, appellant preferred appeals before the Commissioner (A), who disposed of the said appeals by remanding the issue back to the original authority for fresh adjudication. In the remand proceedings, the learned original authority once again rejected the entire amount of refund claim which was rejected earlier in the first round of litigation. Aggrieved by the said rejection of refund claims, appellant preferred appeals before the Commissioner (A) and the Commissioner (A) rejected the said appeals and upheld the orders of the original authority. Statement giving appeal-wise and service-wise details of amount of refund rejected is reproduced herein below:
