Whether refund is admissible only to assessee registered with department?

PJ/CASE LAW/2014-15/2319

Case:- COMMR. OF S.T., BANGALORE VERSUS AVIVA GLOBAL SERVICES (BANG.) P. LTD.

Citation:-2014(33) S.T.R. 270(Tri.-Bang.)

Brief Facts:-The stay application filed by the department arises in Appeal No. ST/1876/2010 which is directed against a part of the order passed by the Commissioner (Appeals). After hearing both sides, Tribunal was of the view that the appeal itself is fit for summary disposal. Therefore, after dismissing the stay application, the appeal of department was taken up to be heard and disposed of with the assesseee’s Appeal No. ST/2384/2010 which is directed against another part of the Appellate Commissioner’s order.

The assessee had claimed refund, under Rule 5 of the Cenvat Credit Rules, 2004, of certain amounts of unutilized Cenvat credit on 'input services' which were claimed to have been used in relation to export of output service. The original authority rejected the claim of refund to the extent of Rs. 1,24,27,580/- on the ground that no nexus was established between the input services and the output service. It sanctioned refund of Rs. 85,02,011/-. Aggrieved by the rejection of refund claim to the tune of Rs. 1.24 crores, the assessee preferred an appeal to the Commissioner (Appeals). The appellate authority found nexus between the output service and some of the input services viz., security services, recruitment services, manpower outsourcing, advertisement, training expenses, clearing and forwarding etc. and directed the lower authority to re-quantify the amount for refund in the light of the Board's Circular No. 120/1/2010, dated 19-1-2010. The Revenue's appeal before Tribunal is directed against this part of the Commissioner's order and the same is on the ground that the appellate Commissioner did not have the power of remand and hence his order is liable to be set aside.

The learned Commissioner (Appeals), in respect of certain other input services viz., air ticket booking, photocopying expenses, get-together staff welfare services, hospitality services and professional charges, held that these were not essential for the output service. In the result, the order of the original authority in relation to these input services came to be upheld. The assessee's appeal before Tribunal is directed against this part of the appellate Commissioner's order. In their appeal, tribunal has also found a challenge against denial of refund for the period prior to 10-10-2006 for want of registration with the department.

Appellant contentions:-Learned SDR reiterates the findings of the lower authorities and states that they could not have availed the Cenvat credit before the registration.

Respondent contentions:-The counsel for the respondent reiterated the findings of the lower authorities.

Reasoning of Judgment:-After hearing both sides and considering their submissions, Tribunal have found no valid point in the Revenue's appeal inasmuch as the appellate authority itself took a view on the nexus issue and sent the case back to the original authority for the limited purpose of re-quantification of the amount for refund in terms of the Board's circular ibid. It was not a remand and hence the Revenue's challenge fails. Their appeal stands dismissed.
One part of the challenge set up by the assessee is against the denial of refund on the ground of absence of registration with the department. The learned counsel for the assessee has claimed support, in this connection, from the Hon'ble High Court's judgment dated 23-9-2011 in Central Excise Appeal No. 6/2011 (M/s. mPortal India Wireless Solutions Pvt. Ltd. v. Commissioner of Service Tax, Bangalore) [2012 (27) S.T.R. 134 (Kar)]. Para 7 of the Hon'ble High Court's order contain an answer to the issue raised in the assessee's appeal and the same reads as follows :
"7. Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsels 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."

In view of the above ruling of the jurisdictional High Court, we hold that no part of the refund claim can be denied on the sole ground of absence of registration.
As regards the Appellate Commissioner's decision in relation to air ticket booking, photocopy expenses, get-together staff welfare, hospitality service and professional charges, we find that the said view has not been successfully contested: It appears from the submissions of the learned counsel that the assessee is serious in their challenge in respect of only two services, namely, air ticket booking and professional charges. In this connection, it is submitted that the air tickets were used by employees of the company in connection with the business of the company. Similarly, it is submitted that the professional charges were paid to Chartered Accountants in connection with the business of the company. Neither of the submissions is supported by any documentary evidence. The learned counsel for the assessee submits that, given an opportunity, the requisite evidence can be adduced before the original authority. In relation to photocopying expenses, get-together staff welfare and hospitality service, the learned counsel fairly submits that the assessee does not want to pursue the matter any more.

As regards other services, viz. air ticket booking and professional charges, we are inclined to grant an opportunity to the assessee for the ends of justice. Accordingly, the decision taken by the lower appellate authority in relation to these services is set aside and the question of nexus is directed to be reexamined by the original authority after giving the assessee a reasonable opportunity of adducing evidence and of being personally heard. Needless to say that, in case the decision on merits in respect of these services goes in favour of the assessee, the amount for refund should be determined in terms of the Board's circular dated 19-1-2010 ibid. assessee's appeal stands disposed of in these terms.

Decision:-Assessee’s appeal allowed/revenue appeal rejected.

Comment:-The gist of this case is that registration with department is not mandatory to file refund of CENVAT Credit. The reason for the same being that it was concluded by the High Court in the case of mPortal India Wireless Solutions Pvt. Ltd. v. Commr. Of S. Tax. – 2012(27) S.T.R. 134 (Kar.)that there is no provision in the Cenvat Credit Rules that the refund is not admissible to unregistered manufacturers or unregistered service providers.

Prepared by: Hushen Ganodwala

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PJ/CASE LAW/2014-15/2319

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