CESTAT, MUMBAI BENCH
WNS Global Services (P.)Ltd.
Commissioner of Central Excise, Pune-II
APPEAL NOS. ST/231 TO 233 OF 2009 AND 241 TO 243 & 497 TO 501 OF 2010
ORDER NOS. A/915/926/12 CSTB/C-I
NOVEMBER 7, 2012
P.R. Chandrasekharan, Technical Member
There are twelve appeals, five pertaining to Mumbai Commissionerate, four pertaining to Nasik Commissionerate and three pertaining to Pune Commissionerate. The appellant is the same in all the cases and the issues involved are also more or less the same and hence we take up all these appeals for consideration together.
2. The appellant is a service provider under the category of “Business Auxiliary Services” and have been exporting services to their clients abroad. The appellant claimed refund of input service tax credit which they could not utilize under Rule 5 of the CENVAT Credit Rules, 2004. These refund claims were partly sanctioned and partly rejected. It is against the part rejection of the refund claims the appellant is before us.
3. As regards the refund claims filed in Mumbai Commissionerate, the period involved is April 2006 to March 2008 and there are five refund claims and the amount of refund rejected in respect of these five claims works out to 46,53,056/-. The refund claims have been rejected on the ground that ‘input service’ on which credit have been taken are not in fact input services for rendering of the output services and there are also errors in the computation of the refund claimed.
3.1 As regards the three refund claims pertaining to Pune Commissionerate, the total amount of refund rejected works out to Rs. 37,59,976/- and the period involved in April, 2005 to March, 2006 and these refund claims have been rejected on the ground that output service which the appellant rendered, namely Call Centre Services, were exempted prior to 01.03.2006 and therefore, the appellant could not have availed service tax credit as the output service was exempted.
3.2 As regards the four refund claims pertaining to Nasik Commissionerate, the period involved is April 2005 to July. 2007 and the amount of refund claim rejected is Rs. 35,30,756/-. The reason adduced for rejection of the claim is that the export of the service did not take place directly from the premises of the appellant but were routed through telecom service provider who uplinked the data from their service centre to the clients abroad. It is also alleged that the service undertaken by the appellant was correctly classifiable under Information Technology services which came into tax net with effect from 16.05.2008 and therefore, credit could not have been availed on a service which was not an output service at the relevant time. Another ground for rejection is that the appellant had taken credit on the basis of input service distribution and the Head Office of the appellant was not registered as input service distributor prior to 16.05.2006 and therefore, they could not have availed CENVAT credit.
4. The learned Counsel for the appellant makes the following submissions.
4.1 As regards the refund claim pertaining to Mumbai Commissionerate, the input service on which they availed credit are such as advertising services, clearing and forwarding services, Rent-a-cab services, warehousing services, cleaning services, GTA services, event management services, catering services, accounting services, security services etc. All these services are essential for rendering the output services and, therefore, the rejection of the refund claims on the ground that these services are ineligible input service is not correct in law. Accordingly, he prays for allowing the refund of credit in respect of these services. There are also a catena of decisions of this Tribunal and the various high courts holding that the aforesaid services are input services as defined in Rule 2(1) of the CENVAT Credit Rules, 2004.
4.2 In respect of the refund claim pertaining to Pune Commissionerate, the Advocate submits that even though the Call Centre services were exempt prior to 01.03.2006, inasmuch as these services were exported, they are rightly entitled for the refund of the input service credit taken thereon. He also relies on the judgment of this Tribunal, in their own case, in Order No. A/49 to 51/08/WZB/CSTB/C-I dated 18.01.2008 wherein this Tribunal held that as per the substituted Rule 5 of the CENVAT Credit Rules, 2004, there is no condition that it was applicable only for exports made after 14.03.2006 and if the claim has been filed on or after 14.3.2006 and the claim satisfies the requirement of Rule 5 and the Notification issued thereunder, then there is no bar in availing service tax credit and claiming refund thereof. He further relies on the judgment of Hon’ble Bombay High Court in the case of Repro India Ltd. v. Union of India 2009 (235) ELT 614 (Bom.) wherein it has been held that in respect of export transaction even if the same is exempted refund of service tax paid on input service could be rightly availed.
4.3 With respect to the service tax refund pertaining to Nasik Commissionerate, the learned Advocate submits that in their own case this Tribunal in order No. A/686-687/12/CSTB/C-I dated 30.10.2012 had considered their claim and remanded the case back to the authorities at Nasik for reconsideration of the matter.
4.4 In view of the above submissions the learned Counsel argues that the claims are maintainable in law.
5. The learned A.R. appearing for the Revenue reiterates the findings of the lower authorities.
6. We have carefully considered the rival submissions.
6.1 As regards the claims pertaining to Mumbai Commissionerate, we find that input services on which credit taken have a direct nexus with the output service rendered considering the nature of the service itself such as auditing and accounting, advertising, rent-a-cab, outdoor catering service, cleaning service, security services, tour operator services, GTA services etc. Some of these services are also specifically included in the definition of ‘input service’ under Rule 2(1) of the CENVAT Credit Rules, 2004. The Hon’ble High Court of Mumbai in the case of CCE v. Ultratech Cement Ltd.  29 STT 244 (Bom.) held that the definition of input service under Rule 2(1) of the CENVAT Credit Rules, 2004 is very wide and any service which has a nexus with the business of manufacturing or business of providing output service can be considered as an eligible input service. There are also a large number of decisions of various Hon’ble High Courts and this Tribunal wherein it has been held that outdoor catering services, rent-a-cab service, GTA service, cleaning service, security service, accounting and auditing service, advertising service etc., are eligible input services. Therefore, the appellant is rightly entitled for the input service tax credit taken and for refund thereof on export. There is no finding given by the lower authorities herein as to why or as to how a particular service has no nexus with the output service rendered by the appellant.
6.2 In view of the above we remand the matter back to the original adjudicating authority in Mumbai to consider the claim of the appellant taking into various decisions of the Tribunals and the Hon’ble High Courts on the subject matter and consider the refund claims. Of course it will be the responsibility of the appellant to establish that the refund claims pertain to export transactions undertaken by them and the export proceeds have been received in convertible foreign exchange by the appellant and their claims have been filed within the time period stipulated in the Notification issued under Rule 5 of the CENVAT Credit Rules, 2004.
6.3 As regards the three refund claims pertaining to the Pune Commissionerate, we find the claim has been rejected only on the ground that for the period prior to 2006, the output services rendered by the appellant namely, ‘Call Centre Services’ were exempted prior to 01.03.2006 and therefore they are not entitled for service tax paid on input services. We find that in the appellant’s own case, this Tribunal has considered the matter vide order dated 18.01.2008 cited supra and in para 9 of the said order this Tribunal held as follows:-
“9. We are however in agreement with the last plea taken by the appellants that the refund claim filed by them on 26.4.2006 onwards will be governed by the rules as it stood on those dates. The substituted Rule 5, nowhere suggests or says that it will apply for exports made after 14.3.2006. Hence any claim filed on or after 14.3.2006 which satisfies other requirements of the rules and Notification issued thereunder cannot be turned down on a ground which is not a condition or requirement of the rule or notification. A statute cannot be treated retrospective merely because it relates to the past action. A statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transaction already past alone is called a retrospective legislation. The position that a prospective benefit under a statutory provision is measured by or depends on antecedent facts does not make the provision retrospective. As pointed by the learned Advocate. Counsel for the appellant, this has also been stated in the Principle of Statutory Interpretation by G.P. Singh at page 462-468 of the 9th Edition that a statute conferring prospective benefit on antecedent facts does not necessarily make the provisions retrospective. Reference in this regard has been made to the Supreme Court decision in the case of Boucher Pierre Andre v. Superintendent, Central Jail, Tihar, New Delhi AIR 1975 SC 164 : (1975) I SCC 192 wherein para 2 the Supreme Court held that benefit to set off pre-conviction detention period against the term of imprisonment conferred by section 428 of the Criminal Procedure Code, 1974 ‘where an accused person, has, on conviction been sentenced to imprisonment for a term’ is also available where the sentence was imposed before the commencement of the Code to reduce the unserved portion of the sentence and that in so construing the section it was not given any retrospective effect for it did not affect the sentence already undergone but affected only that part of the sentence which remained to be served in future.”
6.4 Further the Hon’ble High Court of Mumbai in the case of Repro India Ltd. (supra) held that CENVAT credit would be available in respect of input/input services used in the manufacturing of final product being exported irrespective of the fact that the final products are otherwise exempted. CENVAT credit would be available even in respect of exempted service exported and the credit so availed can be refunded under Rule 5 of the CENVAT Credit Rules, 2004, subject to the satisfaction of conditions specified for availing the refund of the unutilized CENVAT credit. Therefore, the rejection of the refund claimed on this ground by the Revenue is without any basis and contrary to the decision of the Hon’ble High Court in the case of Repro India Ltd. (supra). Accordingly, this order is also set aside and the case is remanded back to the original adjudicating authority to consider the refund claims in the light of the decision in Repro India Ltd. (supra) and the appellant’s own case in the order dated 18.01.2008. It is for the appellant to satisfy that the ‘input services’ on which credit has been availed pertains to services which have been exported in accordance with the provisions of Rule 5 of CENVAT Credit Rules, 2004, and within the time-limit stipulated for filing the refund claim.
6.5 As regards the four refund claims pertaining to Nasik Commissionerate, there are two issues. As regards the argument of the department that the services are not directly exported from the premises of the appellant but were routed through telecom service provider, this ground is totally unsustainable. When an exporter undertakes exports electronically, the data has to be delivered to the telecom authorities for transmission of the same abroad. That does not mean that export has not been taken place. So long as the data has been transmitted abroad and the appellant has.received the consideration in convertible foreign exchange the export is deemed to have been taken place. Therefore, rejection on this ground is clearly unsustainable in law.
6.6 Further the argument that the IT services were not taxable prior to 16.03.2008 and therefore CENVAT credit could not be taken lacks force. In the case of an export transaction, it is immaterial whether the output service is exempt or not taxable. What is required to be seen is that the input service which has been utilized in rendering the output service is a taxable service on which service tax has been paid. Any other view would lead to export of taxes which are not the policy objective. The ratio of the decision of the Hon’ble Bombay High Court in the Repro India Ltd. (supra) would also apply to such services and accordingly we hold that the appellant would be rightly entitled for the service tax paid on input service which has been used in rendering of the output service which has been exported.
6.7 There is one more ground on which the refund claim has been rejected i.e. prior to 16.05.2006 the appellant did not have registration as an input service distributor and hence the appellant could not have availed service tax credit on ISD basis. However, what is required to be seen is whether the appellant received the services at Nasik and if so the appellant used the same for rendering of the output service. These facts need to be verified by the revenue instead of summarily rejecting the claim.
7. In sum, we remand the case back to the original adjudicating authorities at Mumbai, Pune and Nasik to consider the claims of the appellant afresh in the light of the decisions of this Tribunal and the Hon’ble High Court of Mumbai and the guidelines given above. The appellant is also directed to produce evidence by way of documents that the refund claims pertain to services which have been exported (for which consideration has been received in convertible foreign exchange) and the claims have been filed in time. Thus the appeals are allowed by way of remand in the above terms.