Case Law Details

Case Name : Thorogood Associates India Private Limited Vs Commissioner Of Central Tax (CESTAT Bangalore)
Appeal Number : Service Tax Appeal No. 20050 of 2021
Date of Judgement/Order : 06/08/2021
Related Assessment Year :

Thorogood Associates India Private Limited Vs Commissioner Of Central Tax (CESTAT Bangalore)

In present case, the appellant has complied with the conditions prescribed under para 2(h) of the Notification No.27/2012 and debited the CENVAT account on 31.3.2018 though there was some delay in debiting the CENVAT account but the delay in debiting the CENVAT account is only a procedural delay and will not defeat the substantial right of the appellant to claim refund.

Further, I find that when the appellant filed the refund claim in February 2018, by that time, the erstwhile Service Tax Regime was repealed with GST Regime and the refund claim was filed under Rule 5 of CENVAT Credit Rules, 2004 and there was no occasion to debit the CENVAT credit account and reflect the same in ST-3 Returns as the company by that time was filing GST Returns under GST law.

I also find that appellant had not transitioned the said credit to GST Regime and has submitted the proof for not transitioned the credit to GST Regime. The decision relied upon by the learned AR is not applicable to the present case and is distinguishable on facts and legal provisions.

This Tribunal in the case of Chariot International Pvt. Ltd. cited supra by relying upon the Division Bench decision of the CESTAT Mumbai in the case of Sandoz Pvt. Ltd. – 2015 (325) ELT 387 had held that when the assessee reverses the credit in the GSTR-3B but there was only a delay in debiting the same, then in that case, it is deemed to be procedural delay and will not disentitle the appellant from claiming the refund.

Other decisions relied upon by the appellant cited supra have also consistently held that delay in debiting the CENVAT account will not defeat the substantial right of refund of the claimant.

Further, I hold that appellant is also entitle to claim refund of Rs.761/- because ‘Event Management Service’ falls within the definition of input service as provided in Rule 2(l) of CENVAT Credit Rules, 2004.

FULL TEXT OF THE CESTAT BANGALORE ORDER

The present appeal is directed against the impugned order dated 27.7.2020 passed by the Commissioner (Appeals) whereby the Commissioner (A) has rejected the appeal of the appellant and upheld the Order-in-Original.

2. Briefly the facts of the present case are that the appellant is engaged in the business of providing ‘Information Technology Software Services’ to their clients located outside India and are availing CENVAT credit of service tax paid on input services. Appellant filed refund claim for Rs.21,06,729/- on 20.2.2018 for refund of unutilised CENVAT credit of service tax availed on inputs/input services said to have been used for providing output services viz., Information Technology Software Services said to have been exported during the period April 2017 to June 2017 under Notification No.27/2012-CE dated 18.6.2012 read with Rule 5 of CENVAT Credit Rules, 2004. Subsequently, a show-cause notice was issued to the appellant and after following the due process, the original adjudicating authority vide Order-in-Original dated 28.2.2019 rejected the refund claim of Rs.761/- as ineligible and remaining claim amount of Rs.21,05,968/- in terms of condition 2(h) of the Notification No.27/2012 dated 18.6.2012 as the amount claimed was not debited from their CENVAT account at the time of filing the refund claim. Aggrieved by the Order-in-Original, appellant filed appeal before the Commissioner (A). Commissioner (A) also rejected their appeal and upheld the Order-in-Original. Hence, the present appeal.

3. Heard both the parties and perused the records.

4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law and the binding judicial precedents. He further submitted that the appellant in fact had complied with the conditions prescribed in para 2(h) of the Notification No.27/2012. He further submitted that the refund claim was filed on 20.2.2018 but the appellant debited the CENVAT account on 31st March, 2018 and the delay in debiting the CENVAT account was not deliberate and intentional but on account of the fact that the appellant followed the journal accounting practice wherein journal entries are posted at the end of the month. He further submitted that the failure to debit the CENVAT account on the date of filing the refund claim is not such a lapse that it would debar the appellant from claiming the refund. Appellant has also attached the entry passed in the books for debit of CENVAT account. He further submitted that when the appellant filed the refund claim in February 2018, by that time, the erstwhile Service Tax Regime was repealed with GST Regime and since, the refund was filed under Rule 5 of the CENVAT Credit Rules, 2004, there was no occasion to debit the CENVAT account and reflect the same in ST-3 Returns as the company was filing GST Returns under GST law by that time. He also submitted that the appellant has not transitioned the said CENVAT credit to GST Regime and for this, they had also filed declaration before the adjudicating authority vide letter dated 28.2.2019 which is also annexed with the written submissions. He further submitted that the delay in debit to CENVAT account is merely procedural in nature which would not defeat the substantive right of refund. For this submission, he relied upon the judgment of this Tribunal in the case of Chariot International Pvt. Ltd. – 2021 (6) TMI 711 CESTAT Bangalore. He also cited the decision in the case of Convance Clinical Development Pvt. Ltd. 2021 (7) TMI 102 wherein it was held that disclosure of debit to CENVAT account in the Service Tax Returns is not a requirement or a condition under Notification No.27/2012. He also cited the following decisions:

  • Gemini Software Solutions Pvt. Ltd. vs. Commissioner of Central Excise, Customs and Service Tax, Trivandrum: 2020 (1) TMI 844 – Tri-Bangalore.
  • Inguest Technologies Software Pvt. Ltd. Vs. Commissioner of Central Tax, Bangalore North – 2019 (6) TMI 565 – Tri. Bangalore.
  • Sandoz Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur- 2015 (10) TMI 882 – (Tri. – Mumbai)
  • Inductoterm Group Pune Pvt. Ltd. Vs. Commissioner of Service Tax, Pune-1 (Tri. – Mumbai) – 2017 (8) TMI 218
  • Commissioner of Service Tax vs. Kiwi Technologies India Pvt. Ltd. – 2018 (2) TMI 689 – (Tri. – Allahabad)

Wherein the refund was allowed even if there was a delay in debit to CENVAT account and the debit was not reflected in the ST-3 Returns.

4.1 Learned counsel distinguished the decision of the Hyderabad – CESTAT in the case of Apex Co Vantage Pvt. Ltd. Vs. Commissioner (Appeals)- 2018 (6) TMI (814) – Tri.-Hyderabad and submitted that the facts in the present case are quite different. He further submitted that in the said case there was a delay in debiting the amount in CENVAT account both in ST-3 Returns as well as in Books of Accounts, whereas in the present case, the fact pattern is completely different, as in the present case, there was no occasion to file ST-3 Returns when the refund was claimed and hence, the said case is not applicable in the present case. He also submitted that in the impugned order, the Commissioner (A) has relied upon the decision of the apex court which is not applicable in the fact situation of the present case because in the present case, refund has been claimed under Notification No.27/2012 which was issued under Rule 5 of CENVAT Credit Rules and not an exemption Notification issued under Section 93 of the Finance Act, 1994.

4.2 With regard to denial of refund claim for ‘Event Management Service’, the learned counsel submitted that ‘Event Management Service’ falls within the scope of “input service” as it relates to projector taken on rent for business meetings from an Event Management Company and the said service was used in the course of business and therefore, the same is eligible in view of the decision of the Tribunal in the case of M/s. Moneygram India Pvt. Ltd. Vs. Assistant Commissioner, Mumbai West [2020-TIOL-454-CESTAT-MUM].

5. On the other hand, the learned Authorised Representative for the Revenue reiterated the findings of the impugned order and cited the decision of Wisdomleaf Technologies Pvt. Ltd. Vs. Commissioner of Central Tax, Bangalore North – 2019 (6) TMI 209 – CESTAT Bangalore and submitted that this Tribunal has rejected the refund claim by relying upon the decision of Hyderabad CESTAT in the case of Apex Co Vantage Pvt. Ltd. cited supra.

6. After considering the submissions of both the parties and perusal of the material on record, I find that in the present case, the appellant has complied with the conditions prescribed under para 2(h) of the Notification No.27/2012 and debited the CENVAT account on 31.3.2018 though there was some delay in debiting the CENVAT account but the delay in debiting the CENVAT account is only a procedural delay and will not defeat the substantial right of the appellant to claim refund. Further, I find that when the appellant filed the refund claim in February 2018, by that time, the erstwhile Service Tax Regime was repealed with GST Regime and the refund claim was filed under Rule 5 of CENVAT Credit Rules, 2004 and there was no occasion to debit the CENVAT credit account and reflect the same in ST-3 Returns as the company by that time was filing GST Returns under GST law. I also find that appellant had not transitioned the said credit to GST Regime and has submitted the proof for not transitioned the credit to GST Regime. The decision relied upon by the learned AR is not applicable to the present case and is distinguishable on facts and legal provisions. This Tribunal in the case of Chariot International Pvt. Ltd. cited supra by relying upon the Division Bench decision of the CESTAT Mumbai in the case of Sandoz Pvt. Ltd. – 2015 (325) ELT 387 had held that when the assessee reverses the credit in the GSTR-3B but there was only a delay in debiting the same, then in that case, it is deemed to be procedural delay and will not disentitle the appellant from claiming the refund. Other decisions relied upon by the appellant cited supra have also consistently held that delay in debiting the CENVAT account will not defeat the substantial right of refund of the claimant. Further, I hold that appellant is also entitle to claim refund of Rs.761/- because ‘Event Management Service’ falls within the definition of input service as provided in Rule 2(l) of CENVAT Credit Rules, 2004. Hence by following the ratio of the above said decisions, I am of the view that the impugned order is not sustainable in law and set aside the same by allowing the appeal of the appellant with consequential relief, if any.

(Order was pronounced in Open Court on 06/08/2021.)

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