Refund of unutilized cenvat credit to output service provider for exports made before 14.03.2006 available as output service provider allowed refund under Rule 5 after substitution from 14.03.2006

PJ/Case Laws/2011-12/1209

Case: - Commissioner of Service Tax, Mumbai v/s WNS Global Services (P) Ltd.

Citation: - 2011(22) S.T.R. 609 (Bom.)

Issue: - Refund of unutilized cenvat credit to output service provider for exports made before 14.03.2006 available as output service provider allowed refund under Rule 5 after substitution from 14.03.2006?

Brief fact: -Respondent is an output service provider. It applied for refund of unutilised cenvat credit in respect of exports effected for the period before 14.03.2006 when Rule 5 of CCR, 2004 was amended.

Rule 5 of CCR, 2004 was amended on 14.03.2006 vide Notification No. 4/2006-CE(NT) by which the refund of unutilised cenvat credit was made available to output service providers also.

Revenue contended that refund will be available to the output service provider for the exports effected after 14.03.2006 and for exports made prior to that date. That Rule 5 of the Cenvat Credit Rules, 2004 as it stood prior to 14-3-06 permitted refund of unutilized Cenvat credit only to a manufacturer and not to a provider of output service.

The Tribunal held in favour of the assessee. It was held that the substituted Rule 5 nowhere states that the said Rule applies only in respect of exports made after 14.03.2006 and therefore, the refund of credit cannot be denied to the respondent. [2008 (10) STR 273 (Tri-Mumbai).

Hence, Revenue is in appeal before the High Court.

Reasoning of Judgment: -The High Court held that the finding of the Tribunal cannot be faulted because substituted held that substituted Rule 5 of the CCR, 2004 does not make any distinction between exports made prior to 14.03.2006 or after 14.03.2006. In other words, as per the substituted Rule 5 refund of unutilised credit is available to the manufacturer as also by the provider of output service subject to the conditions set out therein.

On the facts of the present case, it was held that the appellant fulfilled all the other conditions stipulated in Rule 5. Thus, a reading of Rule 5 as a whole evidently provided that refund of unutilised credit is allowable not only to manufacturers but also available to providers of output service. Question answered in favour of the assessee and against the Revenue.

Decision: -Appeal disposed off.

Comments:- A landmark judgement in favour of assessee. Earlier it was held that the refund of unutilised service tax credit is available to assessee even before amendment in notification 5/2006 as it was provided in the rule. Now it is provided that it is available to output service provider even before 14.3.2006.

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PJ/Case Laws/2011-12/1209

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