CESTAT Chandigarh Allows CENVAT Refund Where Credit Was Not Challenged

Genpact India Vs Commissioner of Central Goods & Service Tax (CESTAT Chandigarh)

The Chandigarh Bench of the CESTAT considered four appeals filed by Genpact India against orders of the Commissioner (Appeals) rejecting refund claims under Rule 5 of the CENVAT Credit Rules, 2004. The appeals involved refund amounts aggregating to Rs. 1,12,48,063/- for different periods between February 2008 and September 2010. The appellant was primarily engaged in providing BPO services, including call centre, back-office management and IT help-desk services.

It provided services to an overseas entity and exported the majority of its output services, while some services were provided to customers in India. The appellant classified its services as Business Auxiliary Services under the Finance Act, 1994, and there was no dispute regarding the classification or the export character of the services supplied to the overseas entity. Since substantial output services were exported, CENVAT credit on input services remained unutilized and refund was claimed under Rule 5.

The department had not disputed the eligibility of the CENVAT credit when it was originally availed, and no proceedings under Rule 14 of the CENVAT Credit Rules, 2004 were initiated to recover the credit. The refund claims were nevertheless partly rejected, principally on grounds concerning nexus between the input services and exported output services. The appellant contended that the disputed period was prior to April 2011, when restrictions were introduced in the definition of input service, and that the disputed services qualified as input services under the applicable provisions.

It also relied upon CBEC Circular No. 120/01/2010-ST dated 19.01.2010, which addressed the nexus between input services and exported output services and clarified that there should not be different yardsticks for determining eligibility of credit and refund. The Tribunal examined the input services involved in the four appeals, including event management, general insurance, tour operators, credit rating agency, sponsorship, construction, mandap keeper, club or association, works contract, share transfer agent, health and fitness, dry cleaning, video production agency, interior decorator, insurance auxiliary and authorised service station services.

The Tribunal noted that the individual services had been recognised as input services in various judicial decisions. In particular, the Tribunal relied upon the principle laid down in Rule 14 of the CENVAT Credit Rules, 2004 and the decision in Qualcomm India Pvt. Ltd., which had held that where availment of CENVAT credit had not been questioned at the time of availment, the eligibility of such credit could not subsequently be questioned while processing a refund under Rule 5.

The Telangana High Court had affirmed that principle in the Qualcomm matter. The Tribunal also considered Tata Teleservices (Maharashtra) Ltd. in relation to general insurance services, including insurance for employees and family members. The Tribunal reproduced the relevant clarification contained in Circular No. 120/01/2010-ST dated 19.01.2010, including the specific discussion concerning BPOs and call centres and the services necessary for efficient provision of exported services. On the basis of the above reasoning, the Tribunal held that the impugned orders were not sustainable in law. It set aside the orders and allowed all four appeals with consequential relief, if any, as per law.

Cases Discussed

• Qualcomm India Pvt. Ltd. vs. Commissioner of Customs and Central Excise, Hyderabad-IV – 2020 (43) GSTL 402 (Tri. Hyd.)
• Commissioner of Customs and Central Excise, Hyderabad-IV vs. Qualcomm India Pvt. Ltd. – 2021-TIOL-2305-HC Telangana-ST
• Tata Teleservices (Maharashtra) Ltd. vs. CST, Mumbai-II – (2024) 16 Centax 160 (Tri-LB)
• Warburg Pincus India Pvt Ltd vs. CGST – 2022 (11) TMI 695 CESTAT Mumbai
• Tata Advanced Materials Ltd vs. CCE & ST – 2017 (7) TMI 57 CESTAT Bangalore
• Adani Port and Special Economic Zone Ltd vs. CST – 2016 (42) STR 1010 (Tri. Ahmd.)
• HCL Technologies Ltd vs. CCE – 2015 (40) STR 369 (Tri. Del.)
• CCE vs. Madras Cements Ltd – 2019 (370) ELT 568 (Tri Chennai)
• CCE vs. Convergys India Services Pvt Ltd – 2017 (48) STR 173 (Tri Chandigarh)
• Overseas Infrastructure Alliance (I) Pvt Ltd vs. Commr of CGST – 2021 (44) GSTL 379 (Tri Mumbai)
• Warburg Pincus India Pvt Ltd vs. Commissioner of Service Tax, Mumbai – 2018 (364) ELT 159 (Tri Mumbai)
• Mercedes Benz Research & Development India Pvt Ltd vs. Commr of CT, Bengaluru East – 2021 (51) GSTL 391 (Tri-Bang)
• Outsource Partners International Pvt Ltd vs. Commissioner of Central Tax & C. Ex. – 2022 (58) GSTL 354 (Tri-Bang)
• City Union Bank Limited vs. Commissioner of Central Excise and Service Tax, Trichy – 2013 (4) TMI 166 CESTAT CHENNAI
• Computer Sciences Corp India Pvt Ltd vs. CCE & ST – 2015 TIOL-2123-CESTAT DELHI
• CCE, Chennai vs. M/S Fourrts (I) Laboratories Pvt Ltd – 2009-VIL-30-CESTAT CHE-ST
• 24/7 Customer Pvt. Ltd. Vs. Commissioner of Central Tax Bengaluru East – 2021 (3) TMI 414 CESTAT Bangalore
• Olam Information Services Private Limited vs. Commissioner of Central GST & Excise, Chennai – 2022 (2) TMI 201 CESTAT Chennai
• DBOI Global Services Pvt Ltd vs. Commr of Service Tax, Mumbai – 2017 (48) STR 157 (Tri Mumbai)
• Commissioner of Service Tax, Mumbai-II vs. WNS Global Services – 2016 (44) STR 454 (Tri. Mumbai)
• LG Electronics (India) Pvt Ltd vs. Commissioner of Central Excise & GST Ghaziabad – 2024 (8) TMI 787 CESTAT Allahabad
• Ranbaxy Laboratories Ltd. vs. Union of India and Ors – 2011 (273) ELT 3 (SC)
• Qualcomm India Pvt. Ltd. vs. Union of India and Ors – 2021 (50) GSTL 269 (Bom.)
• Microsoft Corporation (India) Pvt Ltd vs. Commissioner of Service Tax, Delhi/CGST, Gurgaon-I – 2024 (5) TMI 780 (Tri. Chandigarh)

FULL TEXT OF THE CESTAT CHANDIGARH ORDER

These four appeals have been filed by the appellant directed against two impugned orders dated 06.06.2014 and 25.02.2016 respectively passed by the Commissioner (Appeals), whereby the learned Commissioner (Appeals) has rejected the refund under Rule 5 of the CENVAT Credit Rules, 2004Since the issue involved in all four appeals is common, therefore, all four appeals are taken up together for the purpose of discussion and decision. Appeal-wise details of impugned order, period and refund amount are given herein below in tabular form:

2. Briefly stated facts of the present case are that the appellant are primarily involved in the provision of various back-end services in the nature of call centre services, back office management, IT help- desk services, collectively called as “BPO Services”. The appellant have entered into a Master Services Sub-Contracting Agreement with Genpact International, Hungary Branch located outside India. Majority of the services provided by the appellant are exported outside India on behalf of its parent entity located outside India and some portion of services are provided directly to the customers located in India. The appellant have classified their services under taxable category of ‘Business Auxiliary Services’ under Section 65(1) read with Section 65(105)(zzb) of the Finance Act, 1994. It is pertinent to note that there is no dispute with respect to the classification adopted by the appellant as also with respect to the services provided by the appellant to their overseas entity qualifying as export under Export of Services Rules, 2005. Since majority of the services rendered by the appellant qualify as export, CENVAT credit availed by the appellant on various input services remained unutilized and in terms of Rule 5 of the CENVAT Credit Rules, the appellant filed refund claim of such unutilized credit. No objection was raised by the department with respect to eligibility of such CENVAT credit when availed and which remained unutilized due to export nature of majority of output services provided by the appellant. The appellant filed refund claim which was partly allowed and partly rejected by the original authority vide Orders-in-Original. Aggrieved by the Orders-in- Original to the extent refund was denied, the appellant filed appeals before the Commissioner (Appeals), who vide the impugned orders, upheld the rejection of the refund. Hence, the present appeals.

3. Heard both the sides and perused the material on records.

4. The learned Counsel for the appellant submits that the impugned orders are not sustainable in law and are liable to be set aside as the same have been passed without properly appreciating the facts and the law, and binding judicial precedents. 4.1 The learned Counsel further submits that the entire period of dispute is prior to April 2011, i.e. the date on which some restrictions applied on the definition of input service to be eligible for credit. He further submits that all the input services, for which refund has been rejected, are used by the appellant for provision of output services and those services are covered within the definition of ‘input services’ as defined in the CENVAT Credit Rules, 2004. He further submits that the appellant have not been questioned on the correctness or entitlement of CENVAT credit when availed by them and declared in the respective returns and further no proceedings were initiated against the appellant underRule 14 of CENVAT Credit Rules, 2004 for recovery of CENVAT credit which remained unutilized and was sought to be refunded due to export nature of output services provided by the appellant.

4.2 The learned Counsel further submits that all the services, on which CENVAT credit has been denied, have been held to be ‘input services’ in various decisions passed by the Tribunal as well as by the High Courts. He also relies on the Circular No. 120/01/2010-ST dated 19.01.2010, which inter alia clarifies that there cannot be two different yard sticks, i.e., one for determining the eligibility of CENVAT credit and the other for determining the eligibility of refund; in other words, once credit when availed was not objected by the department, the same cannot be challenged during the refund processing stage. For the proposition that credit if not objected at the stage of availment, then the same cannot be challenged during the refund processing stage, he relies on the following decisions:

• Qualcomm India Pvt. Ltd. vs. Commissioner of Customs and Central Excise, Hyderabad-IV – 2020 (43) GSTL 402 (Tri. Hyd.)
• Commissioner of Customs and Central Excise, Hyderabad-IV vs. Qualcomm India Pvt. Ltd. – 2021- TIOL-2305-HC Telangana-ST
• BNP Paribas India Solutions Ltd. vs. Commr. of CGST, Mumbai East – 2022 (58) G.S.T.L. 539 (Tri. Mumbai)
• ADP Pvt. Ltd. vs. Commissioner of Central Tax, Hyderabad-II – 2024 (9) TMI 925 (Tri. Hyd.)

4.3 With regard to denial of credit of service tax paid on ground medical insurance policy for family members, involved in Appeal No. ST/60347/2016, the learned Counsel further submits that the credit is held to be eligible to the appellant. In this regard, he relies on the decision of Larger Bench of the Tribunal in the case of Tata Teleservices (Maharashtra) Ltd. vs CST, Mumbai-II – (2024) 16 Centax 160 (Tri-LB). 4.4 The learned Counsel also prays that the appellant should be granted interest on delayed sanction as provided under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. In this regard, he relies on the following judgements:

• Ranbaxy Laboratories Ltd. vs. Union of India and Ors – 2011 (273) ELT 3 (SC)
• Qualcomm India Pvt. Ltd. vs. Union of India and Ors – 2021 (50) GSTL 269 (Bom.)
• Microsoft Corporation (India) Pvt Ltd vs. Commr. of Service Tax, Delhi/CGST, Gurgaon-I – 2024 (5) TMI 780 (Tri. Chandigarh)

5. On the other hand, the learned Authorized Representative for the department reiterates the findings of the impugned orders.

6. We have considered the submissions made by both the parties and perused the material on records. We note that the main issue involved in the present appeals is whether the learned Commissioner (Appeals) is right in upholding rejection of refund of CENVAT credit due to absence of nexus and other grounds when the said CENVAT credit, when availed, was not objected.

7. As regards nexus, we find that each of the input service involved in the present case, was held to be ‘input service’ by various decisions of the Tribunal. In this regard, we may refer to the service- wise ‘input services’ and the decisions vide which it has been held to be ‘input service’, which are given herein below in tabular form:

9. Further, we find that in the case of Qualcomm India Pvt Ltd vs. Commr (supra), it was held by the Tribunal that if the CENVAT credit has not been questioned at the time of availment, then the same cannot be questioned at the time of refund. The said decision of the Tribunal has been affirmed by the Hon’ble High Court of Telangana in the case of Commr. vs. Qualcomm India Pvt Ltd (supra), wherein the Hon’ble High Court has held as under:

“It is seen that the refund benefit was denied to the respondent/assessee on the sole ground that there was no nexus between the input services and the output services exported by the appellant/revenue – 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 the considered view of the Bench, cannot be held to be justified -Reasons assigned by the Tribunal for holding that the respondent/assessee is entitled for grant of refund of unutilized CENVAT credit under Rule 5 of the Finance Act, does not call for any interference – Both the appeals of the revenue are dismissed. [from para 14, 16, 21, 23 of the judgment]”

10. In view of our discussion above and by following the ratios of the above cited decisions, we are of the considered opinion that the impugned orders are not sustainable in law; consequently, we set aside the same and allow all four appeals with consequential relief, if any, as per law.

(Order pronounced in the open court on 09.07.2025)