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Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/CASE LAW/2015-16/2632

Whether refund can be granted even if registration was not taken at the time of export of services and at the time of receiving input services?
Case:-COMMISSIONER OF SERVICE TAX, MUMBAI-I VERSUS SURE-PREP (INDIA) PVT. LTD
 
Citation:-2015(38) S.T.R. 44 (Tri.-Mumbai)


Brief Facts:-The assessee performs the activity of 100% export of services namely ‘Business Auxiliary Service and filed refund  under notification 5/2006-CE (N.T.).  The lower appellate authority sanctioned the refund and the Revenue is in appeal with stay application against impugned Order-in-Appeal before the Tribunal. As the matter involves verification of the facts, the appeal itself is being taken up with consent of both sides.

Appellant’s Contention:-The Revenue submits that the order is being contested on two grounds; first, the Service Tax registration had not been taken at the time of export of the services and, secondly, that the input services were used for providing output services before the registration was taken, and, therefore, refund cannot be granted in terms of conditions of Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 issued under Rule 5 of the Cenvat Credit Rules, 2004.The Revenue also states that the question of limitation has not been gone into by the lower authorities and the refund has been sanctioned on merits. The Revenue also contested that the Commissioner (Appeals) has not gone into the nexus of input services vis-à-vis the output services.

Respondent’s Contention:-The Respondent argued that the they performs only one activity i.e. 100% export of services namely ‘Business Auxiliary Service’. All the records and books of accounts establish that the input services on which Service Tax has been paid were received and they have been used for providing the output services. The Respondent also relies on Hon’ble Karnataka High Court judgment in the case of mPortal India Wireless Solutions P. Ltd.v. C.S.T., Bangalore - 2012 (27)S.T.R.134 (Kar.)and the Tribunal orders in the cases of Commissioner of Service Tax, Bangalore - 2014 (33)S.T.R.(270) (Tri.-Bang.), KPIT Cummins Infosystems Ltd. v. Commissioner of Central Excise, Pune-I - 2013 (32)S.T.R.356 (Tri.-Mumbai) and Wipro BPO Solutions Ltd. v. Commissioner of Service Tax, Delhi - 2012 (25)S.T.R.371 (Tri.-Del.)to justify her contention that refund can be granted even if registration was not taken at the time of export of services and at the time of receiving input services.
 
Reasoning of judgment:-The Tribunal heard both the parties and considered the rival contentions. The issue hinges on the admissibility of refund of Cenvat credit which has got accumulated due to export of services. The mechanism for granting refund is provided under Notification No. 5/2006-C.E. (N.T.). As per para 3(b) of the Appendix to the notification, the provider of output services has to submit an application indicating the registered premises from which export services are provided. The Tribunal agreed with the Respondent that this is a procedural formality provided in Appendix to the Notification and nowhere in the Notification condition is laid that refund will be granted only if the Service Tax registration has been taken at the time of export of services. This contention is supported by the judgment in the case of mPortal India Wireless Solutions P. Ltd. (supra) cited above to which the Revenue has no answer. Further, The Tribunal is of the view that it can be verified from the records whether the input services were received and utilised for providing the export services. The lower authorities have not done any such verification.
 
As regards the nexus of input services and output services, the Tribunal also agree with the respondent that all the services are used for providing the output services as held in the case of Ultratech Cement Ltd. -2010 (260)E.L.T.369 (Bom.) = 2010 (20)S.T.R.577 (Bom.). The bald statement of the adjudicating authority that input services are not used to provide output services is not supported by any logic and shows non-application of mind.
 
In view of the above,  the Tribunal remand the case, for the limited purpose of verification as discussed in para 5 above, to the adjudicating authority to whom the respondent will produce all relevant documents to satisfy that input services were received and utilised for export services, within one month of the receipt of this order. As the matter is already six years old and the respondent is suffering for no fault of theirs, in the larger interest of justice The Tribunal further direct the adjudicating authority to’ decide the case within three months of the receipt of this order. The respondent is at liberty to approach the Tribunal if the order is not passed within three months.
 
 
Decision:-Appeal allowed by way of remand.

Comment:-The crux of this case is that there is no requirement of service tax registration at the time of export of services per judgment in the case of mPortal India Wireless Solutions P. Ltd. However, as the revenue department has not done any verification that the input services were received and utilised for providing the export services, the case was remanded for the limited purpose to ascertain the usage of input services for providing export services. It is worth noting here that the verification that input services were used for providing export services is not to be done at the time of filing the refund claim and rather it should be verified at the time of availing the cenvat credit itself.  

Prepared by: Bharat Rathore
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