whether refund of Cenvat credit in relation to services received at unregistered premises admissible?

PJ/Case Law/2016-2017/3446

Case-EXL SERVICE.COM INDIA PVT. LTD. Versus COMMISSIONER OF C. EX. & CUS., NOIDA
Citation-2016 (43) S.T.R. 294 (Tri. - All.)
Issue-whether refund of Cenvat credit in relation to services received at unregistered premises admissible?
Brief Facts-The brief facts of the case were that the appellant was an exporter of service having Central Excise Registration dated 21-8-2006 and registered as an 100% EOU with the office of Development Commissioner, NSEZ, Noida and was engaged in providing business of the service for the client located outside India. For the period January to March, 2007 the appellant preferred refund claim of input credit availed which could not be utilized due to the export nature of the output services amounting to Rs. 81,21,592/-. Vide order dated 13-6-2008 part of the refund claim was allowed amounting to Rs. 45,58,308/- and the balance was rejected. Being aggrieved, the appellant preferred appeal before ld. Commissioner (Appeals) who allowed the appeal in part upholding the disallowance with respect to input services received at unregistered premises at the relevant time amounting to Rs. 2,05,860/-, with respect to services received from travel agent Rs. 30,598/-, with respect to guest house expenses Rs. 27,265/-, for invoices not produced Rs. 15,839, for service received from vendor not registered under proper category Rs. 7,344/- and Rs. 3060/- as the name of the appellant assessee was not mentioned on the invoice
Appellant’s Contention.-the appellant assessee was in appeal with respect to the disallowance upheld. As regards, the disallowance of Rs. 2,05,860/- the premises being unregistered, the ld. Counsel explained that the premises in Sector 62, Noida had been subsequently taken after the centralised registration in the year 2006. Further, application for addition of the said promises was made on 7-6-2007 and the same have been approved by Revenue on 1-8-2007. That in view of the fact that the appellant assessee was registered with the Central Excise and Service Tax Department and the premises in question have been subsequently approved and added in the registration certificate, the disallowance is bad. The ld. Counsel further relied on the ruling of the Hon’ble Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd. v. C.S.T., Bangalore : 2012 (27)S.T.R.134 (Kar.) wherein the Hon’ble High Court had held that in case of export of service for seeking refund of Cenvat credit the status of being registered was not required.So far the next ground was concerned with respect to services of travel agent or travel helpdesk amounting to be Rs. 30,598/- was concerned, it was urged that the ld. Commissioner erred in upholding the disallowance by observing that as the appellant is an exporter of service, they can have no business of travelling within India for business purposes. The said finding this extraneous and no disallowance can be sustained of the same. It was further emphasised that the service is in relation to business travel and hence the services received from the travel agent is fully allowable as input services. So far the services received at guest house relating to service tax of Rs. 27,265/- was concerned, it was stated that the guest house was used for business purposes. The travelling executives from other branch offices stay at the guest house for business purposes and as such guest house has indirect nexus with the business of the assessee. Input services received are allowable having direct or indirect nexus with the business of the assessee and as such prays for allowing the same. So far the amount of Rs. 15,839/- was concerned for invoices not produced, the appellant had produced before this Tribunal two invoices, one of Rs. 7,500/- being service tax paid for Internet service and the other invoice had been produced with regard to professional service received for Rs. 689/- totalling Rs. 8,189/-. The ld. Counsel prays that the claim be allowed to the extent invoices are available, not produced earlier. As regards amount of Rs. 7044/- disallowed for the reason that the vendor is not listed in proper category the ld. Counsel draws my attention to the copy of invoice annexed at Page 292 of the appeal book wherein the invoice having been raised by Micro Corporation on the assessee towards software charges Rs. 60,000/- for providing 3 months of support and service tax was Rs. 7344/- have been charged therein. The ld. Counsel stated that there was no dispute with regard to the nature of service and/or receipt of the service or its nexus with the appellant’s business. Only for the reason that the provider of service was registered in different categories or classification of service cannot be the ground for rejection and as such the same was fully allowable. The last disallowance was regarding to invoices raised by manpower recruitment agencies wherein the name of the appellant was not mentioned on the invoice. The ld. Counsel for the applicant had produced the invoices at Pages 293 to 296 of the appeal book. Out of the 4 invoices, 3 invoices were raised in the name of one Mr. Jagat Sabharwal. The invoices were received in the receipt Department of the appellant assessee. The ld. Counsel urged that the appellant had received services and have paid the amount for the service along with service tax and as such the same should be allowed.
Respondent’s Contention-The ld. AR for Revenue relied on various co-ordinate Bench rulings of this Tribunal in the case of Market Creators Ltd. v. CCE : 2014 TIOL 2021 CESTAT-AHM = 2014 (36)S.T.R.386 (Tri.) wherein the fact was that the assessee was registered for providing stock/broker services from the premises at Creative Castle, Vadodara. The assessee had taken Cenvat credit of service tax paid on hiring charges of premises taken by them on rent at 4th Floor, Darpan Apartment, R.C. Dutt Road, Vadodara used by them as Document Retention Centre for storage of number of documents pertaining to the Stock Broker Business. This hired premise was neither registered with the services Department nor used to render any output service directly. The rent receipt did not bear address of the hired premises. The assessee had also availed Cenvat credit on input services used at other unregistered premises located at Junagarh, Jamnagar and Vadodara, from where no output service was provided. This Tribunal, under such circumstances, held that the unregistered premises ought to be registered as ISD (input service distributor) in terms of the Service Tax (Registration of Special Category of Persons) Rules, 2005 read with Rule 7 of CCR and as such appellant cannot take credit on the basis of documents issued by non-registered premises as per ISD under the service tax provisions. The ld. AR also relies on the ruling in the case of Hindustan Zinc Ltd. v. CCE - 2007 TIOL 2214 CESTAT-Delhi = 2007 (214)E.L.T.51 (Tri.), by another co-ordinate Bench of this Tribunal wherein under the fact that the assessee was engaged in the manufacture of lead and zinc concentrates and they had availed Cenvat credit on the basis of invoices issued by CEAT Ltd. to the depot which was duly endorsed in favour of the assessee, the adjudicating authority disallowed the credit and imposed penalty. This Tribunal observed that there was no dispute that the invoice was not issued in the name of the assessee. They did not find force in the submission of the assessee that [there] was no requirement to mention the recipient name in the duty paying document and in absence of document as prescribed under Rule 7(l)(a) of the CCR the disallowance of credit was upheld.

Reasoning Of Judgement-Having considered the rival contentions, tribunal held that so far the amount of Rs. 2,05,860/- was concerned, the same was allowable in view of the fact that the premises in question have been subsequently recognised and added in the centralized registration certificate. Moreover, registration was not a pre-condition for refund of Cenvat credit in case of an exporter of service was held by Hon’ble Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd. (supra). So far the travel agent service was concerned, tribunal held that the same have been wrongly disallowed by the learned Commissioner and tribunal held the same as allowable. So far the service received at guest house is concerned for Rs. 27,265/- tribunal held the same was allowable as the guest house was used for business purposes and have got indirect nexus with the business of the appellant. So far invoice, not produced, was concerned, tribunal allowed the Cenvat credit to the extent of Rs. 8,189/- being the amount of the invoices produced now before this Tribunal during the course of hearing. So far the disallowance of Rs. 7,344/- was concerned on the ground that the provider of service was not registered under proper category, tribunal hold that the disallowance was bad in law, the same is held allowable. So far the invoices for Rs. 3060/- with respect to manpower recruitment service was concerned, tribunal remand the issue to the adjudicating authority with a direction to examine the supporting evidences which may be available in the nature of appointment letter to the concerned persons, who had been named in the invoice of the service provider. If the person shown in the invoices, which has been selected by the recruiting agent and offered to the appellant for employment, and supporting evidences, were produced by the appellant as to providing employment to such persons, payment of salary et cetera, the said amount will be allowable subject to the said verification by the adjudicating authority. Thus, the appeal was allowed in part as indicated above and remanded for verification of the amount of Rs. 3060/- towards manpower recruitment service. The appellant was also directed to appear before the concerned authority with a copy of this order and produce supporting documents with regard to the receipt of manpower recruitment service by them.
Decision-Appeal partly allowed
Comment-the core of this case was that, the disallowance of refund on ground that the premises was unregistered, was bad in law as registration was nowhere a pre-requirement for refund or credit. The tribunal relied on the ruling of the Hon’ble Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd. v. C.S.T., Bangalore : 2012 (27)S.T.R.134 (Kar.) wherein the Hon’ble High Court had held that in case of export of service for seeking refund of Cenvat credit the status of being registered was not required. Therefore it was safe to conclude that refund is admissible even if the premises where services are received is unregistered.
Prepared By- ARUNDHATI BAJPAI

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PJ/Case Law/2016-2017/3446

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