Cognizant Technology Solutions India Pvt. Ltd. Vs Commissioner of Central Excise & Service Tax (CESTAT Chennai)
Service Tax refund: Certificate of existing Statutory Auditor cannot be denied for earlier period
The second issue is that the auditor’s certificate is not signed by the statutory auditor who was engaged during the period when the refund is claimed. Learned Consultant for the appellant has explained that the auditor’s certificate has been issued by M/s. Price Waterhouse & Co. who were engaged at the time of filing the applications for claiming refund, who were the statutory auditors at that point of time.
When the statutory auditor has given the certificate, we do not find any error so as to deny the refund on the allegation of the certificate not being issued by the proper person as required in the Notification. The rejection of refund claims on this ground is set aside.
Service Tax Refund cannot be claimed for non-submission of original invoices
The fourth issue is with regard to the non-submission of original invoices. The relevant condition in the Notification has already been noticed above. The appellant asserts that they have produced the photocopies of all the invoices. The requirement as per the Notification is to produce proof of payment of Service Tax. If the photocopies of the invoices establish the transaction as well as the payment of Service Tax, the Department ought not to have rejected the refund claim stating that original invoices are not produced. We therefore cannot agree with this view taken by the authorities below. If the appellant produces proof of payment of Service Tax, the same should be considered. However, this issue is remanded to the Adjudicating Authority, who shall re-consider this issue after verifying the copies of the invoices/documents produced by the appellant.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The appellant is engaged in providing Information Technology Software Services and holds Service Tax registration for such services as well as services in the nature of Management Maintenance and Repair Services, Business Support Services, etc. The appellant provides services from various premises situated at different locations across the country. They have set up units in Special Economic Zones (SEZ) from where they export services.
1.2 The issue involved in the present appeals relate to 25 SEZ units in regard to which they have filed refund claims. Some of the SEZ units are Chennai MEPZ SEZ Unit, Kochin Technopolis SEZ Unit, Hyderabad DLF SEZ, Kolkata Bantala SEZ, etc. In the course of authorized operations at the SEZ units, the appellants availed various input services on which they are required to pay Service Tax. In terms of Section 7 of the Special Economic Zones Act (hereinafter referred to as the ‘SEZ Act’), 2005, any goods or services exported out of or imported into or procured from the domestic area by a unit in a Special Economic Zone or a developer, are exempted from payment of taxes, Duties or cess leviable under various enactments. The said exemption is provided in two ways, namely: (1) by way of refund of Service tax paid on the ‘specified services’ received by a unit located in a SEZ or the developer of SEZ and used for the authorized operations and (2) by way of not paying Service Tax ab initio. Among the two, the appellant has chosen the option of getting exemption by way of refund. As per Notification No. 09/2009-ST dated 03.03.2009, as amended vide Notification No. 15/2009-ST dated 20.05.2009 superseded by Notification No. 17/2011-ST dated 01.03.2011, the refund claim can be preferred for refund of Service tax paid on input services used in the authorized operations. The appellant filed its refund claims in terms of the above Notifications which existed during the relevant period in Form A-2.
2. After preliminary scrutiny of the refund claims, the appellants were issued Show Cause Notices/Deficiency Memos proposing to reject the refund claims. After due process of law, the Original Authority rejected a part of the refund claims, which orders came to be upheld by the First Appellate Authority vide orders impugned herein. Aggrieved by such orders, the appellant is now before the
3. On behalf of the appellant, Learned Consultant Shri R. Rajaram appeared and argued the matter. He submitted that the refund claims have been rejected for the following reasons:
(i) The refund claim is filed beyond the time-limit of one year from the date of payment of Service Tax;
(ii) The Chartered Accountant certificate is not signed by the statutory auditor who was engaged during the period to which the refund claim pertains;
(iii) The credit availed on certain services are not eligible as these are not included in the specified list of services; and
(iv) The original invoices have not been submitted.
3.1.1 With regard to the first ground, it is submitted by the Learned Consultant for the appellant that as per Clause 3(e) of Notification No. 12/2013-ST dated 01.07.2013 as amended, under which the refund has inter alia been claimed, “the claim for refund shall be filed, within one year from the end of the month in which the actual payment of Service Tax was made by such developer or unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit.” That though the one-year period is prescribed under Section 11B of the Central Excise Act, 1944 for claiming refund, in terms of the said Notification, the time-limit for filing the refund is not restricted to one-year alone and the same can be extended by the Assistant Commissioner. That this clause provides that the Officer can permit a claimant to file the claim beyond the stipulated period of one year; thus, there is no statutory time-limit for claiming the refund and the rejection on this ground is against the provisions of law.
3.1.2 Learned Consultant for the appellant adverted to the dates on which the refund claims were submitted and argued that all the refund claims were filed within one year from the date of payment of Service Tax. The same were returned by the Department directing the appellant to produce necessary documents. That thereafter, the appellant has re-submitted the refund claims along with the required documents. That the appellant has filed the refund claims within time and there was no delay in filing the same. When the refund claims had been returned with direction to furnish necessary documents, the Department cannot deny the refund claims and allege that the claim re-submitted is time-barred.
3.1.3 It is asserted by the Learned Consultant that the original claims were returned only for rectifying the defects of not furnishing necessary documents and they were not rejected after considering the merits. The appellant had re-submitted the claims along with necessary documents later. That it is the settled position of law that the date of filing the original claim should be reckoned for computing the period of limitation; that the date of re-submission has been taken as the relevant date for computing the limitation by the Adjudicating Authority, which is erroneous.
3.1.4 To support his argument, he relied upon the following decisions:
(i) M/s. Shasun Pharmaceuticals Ltd. v. Joint Secretary, MF (D.R.), New Delhi [2013 (291) E.L.T. 189 (Mad.)];
(ii) Commissioner of C.Ex., Delhi-I v. M/s. Arya Exports and Industries [2005 (192) E. L. T. 89 (Del.)];
(iii) M/s. United Phosphorus Ltd. v. Union of India [2005 (184) E. L. T. 240 (Guj.)];
(iv) M/s. Chola Pumps v. C.C.E. & S.T., Coimbatore [2018 (1) T.M.I. 485 – CESTAT, Chennai]
(v) M/s. ATC Tyres Pvt. Ltd. v. Commissioner of G.S. T. & Central Excise, Tirunelveli [2021 (3) T.M.I. 681 – CESTAT Chennai]
3.1.5 It is also submitted by the Learned Counsel for the appellant that as the exemption from taxes / Duties is provided by the SEZ Act, the condition of time-limit prescribed in the Notification cannot be pressed into application to deny the claim of refund. He relied upon the decision in the case of M/s. GMR Aerospace Engineering Ltd. & anor. v. Union of India & ors. reported in 2019 (31) G.S.T.L. 596 (A.P.). That the Tribunal in the case of M/s. ATC Tyres Pvt. Ltd. (supra) held that the provisions of the SEZ Act, 2005 would prevail over the conditions prescribed in the Notifications which are issued under Section 93 of the Finance Act, 1994. That for this reason also, the view taken by the authorities below that the refund is time-barred cannot sustain.
3.2. The second ground for rejection of the refund claims is that it is alleged by the Department that the Chartered Accountant certificate was not signed by the statutory auditor, who was engaged for the relevant period of the refund claims. The Learned Counsel for the appellant explained that the financial statements for the relevant years were signed by M/s. Lovelock and Lewes and the auditor certificate in this case was issued by M/s. Price Waterhouse & Co. That M/s. Lovelock and Lewes and M/s. Price Waterhouse & Co. are part of the same firm. As per Notification Nos. 17/2011-S.T. dated 01.03.2011 and Notification No. 40/2012 dated 20.06.2012, the appellant has to furnish the certificate of the statutory auditor of the SEZ unit/developer; that at the time of filing the applications for claiming refund, M/s. Price Waterhouse & Co. were the statutory auditors and accordingly, the above requirement of the Notification has been complied with. The appellant has furnished the certificate of the auditor who was engaged at the time of making the refund claims. That the Department was of the view that certificate of the auditor who was engaged during the relevant time when the services were provided has to certify the financial statements. He argued that the intention of the Notification is for certification of the transactions by the auditor, who is the statutory auditor at the point of time when the certification is done. That since the auditor who was engaged at the time of filing the refund claims has certified the statements, the authorities below ought not to have rejected the refund claims on this ground.
3.3.1 The third ground for rejection of the refund claims is that certain services are not included in the list of ‘specified services’. It is submitted by the Learned Consultant for the appellant that all the services were used for authorized operations by the appellant and these services have been approved as ‘specified services’ by the Unit Approval Committee (UAC) / Development Commissioner of SEZ. That the authorities below then cannot apply their own view to hold that such services are not specified services for authorized operations.
3.3.2 He relied upon the decision in the case of M/s. Metlife Global Operations Support Center Pvt. Ltd. v. Commissioner, Service Tax reported in 2020 (12) TMI 1069 – CESTAT, New Delhi and M/s. Tata Consultancy Services Ltd. v. Commissioner of Central Excise & ST (LTU), Mumbai reported in 2013 (29) S.T.R. 393 (Tri. – Mumbai) to support his above argument.
3.4.1 The fourth ground on which the refund has been rejected is that the appellant has not produced the original invoices. It is asserted by the Learned Consultant for the appellant that the appellant had produced photocopies of the invoices. That the appellant has various other premises and the invoices on the basis of which refund has been claimed are received from respective vendors in such premises; that it is a time-consuming task to correlate such invoices and provide the complete original invoices for verification by the Adjudicating Authority. That the appellant is in possession of all the original invoices.
3.4.2 Further, that non-submission of original invoices, if at all, is only a procedural lapse when sufficient evidence of payment of Service Tax is produced. The substantive benefit cannot be denied for a procedural lapse. It is asserted by the Learned Counsel that the appellants have submitted the photocopies of all these invoices. Notification No. 17/2011-ST only mandates the proof of payment for the specified services used for authorized operations and the Service Tax paid, in original. The relevant part of the Notification is reproduced as under:
“3. The following procedure should be adopted for claiming the benefit of the exemption contained in this notification, namely:-
…
(f) …
(ii) invoice or a bill or as the case may be, a challan, issued in accordance with the provisions of Finance Act or rules made thereunder, in the name of the Developer or Unit of a SEZ, by the registered service provider, along with proof of payment for such specified services used for the authorised operations and service tax paid, in original”
3.4.3 It is argued by the Learned Consultant for the appellant that once it is established beyond doubt that the services are provided to the SEZ unit, then substantive benefit of refund should not be denied by applying the terms and conditions of the Notification. Further that in the Show Cause Notice, the Department has not disputed that the services were provided to SEZ units.
3.4.4 To support his contentions that photocopies can also be accepted as proof of payment of tax / Duty, Learned Consultant relied upon the decision in M/s. Tata Motors Ltd. v. Commissioner of Central Excise, Customs & Service tax, Bangalore-I reported in 2019 (6) TMI 943 – CESTAT, Bangalore as well as the decision of the Hon’ble High Court of Madhya Pradesh in Union of India v. M/s. Kataria Wires Ltd. reported in 2009 (241) E.L.T. 31 (M.P.)
4.1 On the other hand, Ms. Sridevi Taritla, Learned Authorized Representative, appeared on behalf of the Department. She submitted that the refund claims were filed by the appellant on the last day without any supporting documents. That therefore, these claims were returned to the appellant with a deficiency memo, the details of which are tabulated as under:
