Can service provider avail the benefit of availment of Cenvat credit and refund of unutilized Cenvat credit without registration?

PJ/Case Law/2016-17/3355

Case:- COMMISSIONER OF S.T., BANGALORE VersusTAVANT TECHNOLOGIES INDIA PVT. LTD.
Citation:- 2016 (43) S.T.R. 57 (Kar.)
Brief facts: -The appellant-Revenue has preferred the present appeal by raising the following substantial question of law:
“Whether, the provisions contained in Rules 3 and 4 of the Service Tax Rules, 1994 are mandatory or procedural in nature and the service provider can avail the benefit of availment of Cenvat credit and refund of unutilized Cenvat credit without registration?”
Hon’ble judges heard Mr. Jeevan Neeralgi, learned counsel appearing for the appellant-Revenue.
It was recorded that the Tribunal in the impugned order dated 19-3-2015 in case no. ST/1768/2011-SM at Paragraph-2 had observed:
“2. The learned counsel submits that as regards the first issue, it is covered by the decision of the Hon’ble High Court of Karnataka in the case of mPortal India Wireless Solutions Pvt. Ltd. v. CST, Bangalore [2012 (27)S.T.R.134 (Kar.)]. I find myself in agreement with this and therefore on this ground, claim could not have been rejected. As regards nexus, he has submitted a statement showing each service, name of the output service and justification. On going through the statement which is reproduced below under each category of service, I consider that the appellant has made out a case as regards nexus.”

*Name of input service*	*Name of export of service*	*Justification for availability of Cenvat credit*
Management Consultancy services	ITSS	These services are availed to seeking opinions, technical clarification and understanding of legal provisions, etc. It also includes audits, financial consulting services, filing of returns, etc. This is essential to export software services.
Manpower Recruitment agency services/ Advertise-ment services	ITSS	The appellant procures services of recruitment agency to hire employees to fill up the different open positions in the organization. It is hereby essential in view of the attrition rate that is common to the industry and also to identify the apt candidate for the job. Since the employees are directly related to the services being exported, it is submitted that these services are essential for smooth functioning of export of service.
Rent-a-cab services	ITSS	The company hires vehicles/cabs to pick up its employees from their residence and drop them back. This is essential as the employees have to perform the work at different hours on a shift duty basis. Moreover, the employees are located in different parts of the city and since they are supposed to work in different parts of the city and since they are supposed to work in different time horizons, the productive hours will be lost if they are the public transport facility. So, this service is directly links to the performance of employees which are necessarily required for provision of export of output services.
Outdoor catering services	ITSS	These services are used for providing food for employees, during office hours, as the appellant works round the clock; the appellant has provided facility for outdoor catering.
Security agency services	ITSS	The appellant has availed security services, which is essential in safeguarding the assets of the company. Further, the appellant while providing pick-up and drop facility to its employees needs to communicate the cab details for pick up and drop for employees. Therefore, the said services are essential for export of services.
Business Support Services	ITSS	These services are availed in order to avail the services of payroll processing, accounting, document storage, etc. All these services are essential in order to export ITSS.
Information Technology Software Services/ Commercial training and coaching services	ITSS	These services are availed to learn the new technology/programming, etc., which is essential to export software services.
Renting of immovable property services	ITSS	These services are availed to use the premises from where the services are exported, therefore essential for export of services.
Management, maintenance or repair services	ITSS	These services are availed in order to maintain office equipments like air condition, computers, UPS, etc., which are essential to export the services.
Pandal and shamiana services	ITSS	These services are hired to obtain on rent furniture like chairs, table etc., during the recruitment process.
Tele-communi-cation/ internet services	ITSS	These services are essential to export the software vide internet. Appellant uses the facility of conference calls with its clients, telephone call to its customers aboard to resolve client queries etc., which is essential for export of services.
House keeping	ITSS	These services are rendered to keep the premises clean and hygiene conditions, which is essential for export of service.

After reproduction of the various services rendered by the respondent-assessee at Para 3, it was observed as under:
3. In view of the above, appellant has made out a case for eligibility for refund claim. Accordingly, the appeal is allowed with consequential relief, if any, to the appellant.
As such, if the Tribunal had followed the decision of this Court in case of M/s. mPortal India Wireless Solutions Private Limited (supra), it cannot be said that any substantial question of law would arise for consideration. However, the learned counsel for the appellant-Revenue made an attempt to contend that the view taken by this Court in the above referred decision may require reconsideration because as per him, certain provisions and more particularly of Section 69 of the Registration of service provider has not been considered. He therefore, submitted that the matter may be considered accordingly.
They may record that this Court in its decision in case of M/s. mPortal India Wireless Solutions Private Limited (supra), for the purpose of refund vis-à-vis registration at Para-7 observed thus:
“7. Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat credit rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside.

Appellant’s contention:- learned counsel for the appellant-Revenue contended that the view taken by this Court in the above referred decision may require reconsideration because as per them , certain provisions and more particularly of Section 69 of the Registration of service provider was not considered. He further , submitted that the matter must be considered accordingly.

Respondent’s contention:-the respondent assessee contended that The learned counsel for the appellant was not able to show that there was any liability on the part of the respondent-assessee to pay service tax which was required to be paid and which was required to be adjusted against Cenvat credit or they were not entitled to the refund. They further submitted that the service which was being provided by the respondent-assessee was exempted from the payment of service tax. Further they also contended that the learned counsel was not able to show any provision even under Rule 5 of Cenvat Credit Rules, which provided for condition precedent for registration of the service provider.

Reasoning of judgment:-In view of the above, Hon’ble judges did not find any reason to take a different view than was taken by Co-ordinate Bench of this Court in case of M/s. mPortal India Wireless Solutions Private Limited (supra).
Under the circumstances, no substantial questions of law arose for consideration as sought to be canvassed. Hence, the appeal was dismissed.
Decision:- Appeal dismissed
Comment:- The gist of the case is that as Assessee is exempt from payment of Service Tax and Department was not able to show any liability of assessee which was required to be adjusted against Cenvat credit, therefore he was rightfully admissible for availing the credit and refund. Following the ratio of case ofmPortal India Wireless Solutions Pvt. Ltd. v. CST, Bangalore [2012 (27)S.T.R.134 (Kar.) it was concluded that taking Service Tax Registration was merely a procedural requirement and not a mandatory condition for availing Cenvat Credit or receiving refund of unutilized credit. Therefore when there is no output liability to pay Service Tax, credit can be claimed without taking registration also.
Prepared by:- Monika Tak

Comments

PJ/Case Law/2016-17/3355

Post a Comment

Query