CESTAT directs original authority to decide refund claim after considering submission of Appellant

EYGBS (India) LLP Vs Commissioner of Central Tax (CESTAT Banglore)

CESTAT find that the impugned order has rejected the refund claims on the grounds that the appellant has violated the condition at para 3(III)(a), 3(III)(d) and Rule 5 of SEZ Notification No.12/2013-ST dt. 01/07/2013. Further, I find that the appellant has SEZ units as well as DTA units and had centralized Service Tax registration at Bangalore. The present refund application pertains to only SEZ units and is not connected with DTA units whereas the Commissioner (Appeals) in the impugned order has wrongly come to the finding that the appellant has filed refund claim application for input services which have also been used in DTA units. Further I find that the impugned services involved in the present case for which refund has been denied, fall in the approved list of input services issued by the Development Commissioner and the appellant has produced on record the instruction issued by the Government of India, Ministry of Commerce and Industries, SEZ unit, where I find that these services have been specifically covered as input services. For each violation alleged by the Revenue, appellant have produced documentary proof in the form of invoices, bank statements and other records but the same has not been considered by the authorities below. Appellant has produced all those documentary proof along with the appeal paper book and some of the documents have also been produced along with written submissions at the time of hearing of these appeals. Since those documents and statements have not been considered in the impugned order by the learned Commissioner (Appeals) and the Commissioner (Appeals) has come to the finding which is not based on verification of the documents. In such circumstances, I am of the considered view that the matter needs to be remanded to the original authority with a direction to consider the statements, invoices and documents produced by the appellant in support of his claim and thereafter decide the refund application by passing a reasoned order. The original authority will also consider that in the appellant’s own case for earlier period for the same services, the refund was granted vide Order-in-Original dt. 29/07/2016. In view of my above discussion, the impugned order is set aside. The matter is remanded to the original authority to decide the refund claim application afresh after following the principles of natural justice. All the three appeals are disposed of by way of remand.

FULL TEXT OF THE CESTAT JUDGEMENT

The appellant have filed these three appeals against the common impugned order dt. 01.07.2019 passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) has upheld the Order-in-Original and rejected all the three appeals. Since the issue in all the three appeals is identical and there is a common impugned order, all the three appeals are taken up together for discussion and disposal. The details of all the three appeals are given below:

Further, break-up of services on which refund has been rejected during the impugned period are given herein below:-

2.1. Briefly the facts of the present case are that the appellant, inter-alia, engaged in providing Business Support Services (BSS) and Information Technology Support Services (ITSS) from its following SEZ units to its clients located outside India as well as to the clients located within India:-

i. EYGBS (India) Pvt. Ltd., Athulya, Infopark, SEZ Kakkanad, Kochi

ii. EYGBS (India) Pvt. Ltd., Carnival, Infopark, SEZ Kakkanad, Kochi

iii. EYGBS (India) Pvt. Ltd., Kinfra Film and Video Park, Kazhakuttom, Trivandrum

iv. EYGBS (India) Pvt. Ltd., Gurgaon, Infospace Ltd. IT/ITES Village, Dundahera, Gurgaon.

2.2. Appellant exports its substantial output services for which consideration is received in convertible foreign exchange and the said services qualify as export in terms of Rule 6A of the Service Tax Rules, 1994. Appellant also has DTA units which have no connection with the present refund claims. Appellant has a centralized service tax registration for all its units (DTA and SEZ units) located at RMZ Infinity Tower C, 3^rd Floor, Benniganahalli, Dooravaninagar, Bangalore. During the relevant period for the provision of output services, the appellant has procured various input services which were used for authorized operations within the SEZ units on payment of appropriate service tax and making payment of value and tax to the vendors. In terms of SEZ Notification No.12/2013-ST dt. 01/03/2013, appellant filed three applications in Form A along with relevant documents for refund of service tax and cesses paid on input services procured in relation to authorized operations carried in the SEZ units. On scrutiny of the refund claims and documents submitted by the appellant for the disputed three quarters, three separate show-cause notices were issued to the appellant proposing to deny the refund claims, inter-alia, on the grounds viz. copy of input service invoices are not attested, refund calculation sheet along with export turnover, total turnover, DTA turnover not submitted etc. After following the due process, the original authority vide Order-in-Original No.24/2018, 25/2018 and 26/2018, all dated 06.04.2018 rejected the refund claims. Aggrieved by the said order, appellant filed three appeals before the Commissioner(Appeals) and the Commissioner(Appeals) vide the impugned order has rejected the refund claims of the appellant, inter-alia, on the following grounds:-

a. the appellant has failed to distribute credit to their SEZ and DTA units in the manner prescribed under Rule 7 of Cenvat Credit Rules, 2004;

b. The appellant has failed to show that they have paid the vendors for the invoices on which refund is claimed; and

c. the appellant has not proved that it has not claimed cenvat credit where they have claimed refund.

Aggrieved by the said impugned order, appellant is before me.

3. Heard both sides and perused the records.

4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law because the same has been passed without properly appreciating the facts and documents on record and refund claims have been rejected by taking into account irrelevant consideration and materials. He further submitted that the impugned order has been passed based on assumptions, presumptions, conjectures and surmises and without considering and verifying the documents produced by the appellant before him. He further submitted that the SEZ provision being beneficial in nature and would prevail over anything which is inconsistent contained in any other legislation as provided under Section 51 of SEZ Act. He further submitted that the Commissioner(Appeals) has wrongly assumed that the specified services have been used for authorized operation as well as for operations of DTA units whereas the fact of the matter is that refund application has been filed during the relevant period only with respect of SEZ of the firm. He further submitted that the fact that all the invoices for specified services are specifically issued and addressed to SEZ unit of the appellant makes it clear that the services are used for authorized operation of SEZ and not used by DTA unit but the appellate authority without properly verifying all the documents on record has wrongly come to the conclusion that specified services have been used for DTA unit as well SEZ. Learned counsel has also produced sample copies of various invoices of input services which is annexed as Annexure 6 of appeal paper book. Learned counsel further submitted that appellant has not violated conditions at para 3(III)(d). He referred to para 3 of SEZ Notification and submitted that if the refund pertains to Sl.No.(i), then the service tax paid on specified services which are common to authorized operation in SEZ units and operations in DTA units, only then the service tax paid shall be distributed amongst the SEZ unit and DTA unit in the manner prescribed in Rule 7 of the CENVAT Credit Rules, 2004. He further submitted that the appellant’s case is covered by Sl.No.(ii) and not by Sl.No.(i) and therefore they are not required to fulfill conditions applicable for Sl.No.(i) in the Notification. He further submitted that the appellate authority has failed to acknowledge the fact that the refund has been claimed only proportionately to the export turnover of SEZ unit and therefore provisions of Rule 7 of CENVAT Credit Rules is not applicable because the appellant has not used the specified services for the operations in DTA units. Learned counsel further submitted that vide para 10 of the impugned order, the appellate authority has alleged that bank statement furnished by the appellant as a proof of payment to the input service provider does not refer to any specific invoice number and date and further the amount claimed do not tally with the bank statement submitted by the appellant and there is no correlation between the documents. To counter this finding, the learned counsel submitted that appellant submitted bank statements while filing the refund application with the learned original authority along with correlation of each payment in the bank statement with the vendor invoices against which refund has been claimed but the same were not verified and considered by the Commissioner(Appeals). Learned counsel has submitted copy of the statement capturing invoice-wise details of input services on which refund is claimed by the appellant vide Annexure 7 and extract of the bank statement capturing bank reference number and transaction-wise narrative along with the invoice value vide Annexure-8 along with appeal paper book. Learned counsel further submitted that the appellant has also not violated conditions at para 3(III)(d) which provided that the amount indicated in the invoice, on the basis of which refund is claimed including the service tax has been paid to the service provider. He further submitted that the appellants had made the payment to the vendors after complying with the statutory obligation under the Income Tax Act of deducting tax at source and correlated with the bank statements but the statements were also disregarded by the Commissioner(Appeals). Learned counsel also submitted that the appellant has also not violated condition at para 5 of the SEZ Notification which means that the appellant has proved that it has not claimed cenvat credit on specified services whereas they claimed refund. He further submitted that the appellant submitted invoice-wise details of procurement clearly distinguishing the invoices against which credit is availed in ST3 returns and refund is availed under the present refund claim application. Learned counsel also submitted that the appellant is entitled to interest under Section 11BB of the Central Excise Act read with Section 83 of the Finance Act, 1994. Learned counsel also submitted that in the appellant’s own case, the original authority has granted the refund in similar situations for the period April to June 2015 and the Order-in-Original dt. 29.07.2016 has also been produced on record.

5. On the other hand, the learned AR reiterated the findings in the impugned order.

6. After considering the submissions of both sides and perusal of the material on record, I find that the impugned order has rejected the refund claims on the grounds that the appellant has violated the condition at para 3(III)(a), 3(III)(d) and Rule 5 of SEZ Notification No.12/2013-ST dt. 01/07/2013. Further, I find that the appellant has SEZ units as well as DTA units and had centralized Service Tax registration at Bangalore. The present refund application pertains to only SEZ units and is not connected with DTA units whereas the Commissioner (Appeals) in the impugned order has wrongly come to the finding that the appellant has filed refund claim application for input services which have also been used in DTA units. Further I find that the impugned services involved in the present case for which refund has been denied, fall in the approved list of input services issued by the Development Commissioner and the appellant has produced on record the instruction issued by the Government of India, Ministry of Commerce and Industries, SEZ unit, where I find that these services have been specifically covered as input services. For each violation alleged by the Revenue, appellant have produced documentary proof in the form of invoices, bank statements and other records but the same has not been considered by the authorities below. Appellant has produced all those documentary proof along with the appeal paper book and some of the documents have also been produced along with written submissions at the time of hearing of these appeals. Since those documents and statements have not been considered in the impugned order by the learned Commissioner (Appeals) and the Commissioner (Appeals) has come to the finding which is not based on verification of the documents. In such circumstances, I am of the considered view that the matter needs to be remanded to the original authority with a direction to consider the statements, invoices and documents produced by the appellant in support of his claim and thereafter decide the refund application by passing a reasoned order. The original authority will also consider that in the appellant’s own case for earlier period for the same services, the refund was granted vide Order-in-Original dt. 29/07/2016. In view of my above discussion, the impugned order is set aside. The matter is remanded to the original authority to decide the refund claim application afresh after following the principles of natural justice. All the three appeals are disposed of by way of remand.

(Order was pronounced

in Open Court on 30/06/2021)