2018 (8) TMI 494 – CESTAT MUMBAI – TMI – 100% EOU – Refund of service tax paid – input services – denial on the ground of nexus with the output service provided by the appellant – Held that:- With regard to establishing the nexus between the input and output services, the Tax Research Unit of CBEC vide letter dated 16.3.2012, has clarified that the new scheme introduced by substituting Rule 5 does not require the kind of correlation between exports and input services, which were hitherto provided under the unamended rules. It has been further clarified that service tax paid on the input services will be entitled for refund, on the basis of the ratio of the export turnover to total turnover. Since the TRU has clarified the legislative intent behind the amendment of Rule 5 of the Rules, explaining that no nexus need to be established, denial of refund benefit on sole ground of non-establishment of nexus cannot be sustained for judicial scrutiny – The refund benefit denied to the appella
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d in part and part matter on remand. – Appeal Nos. ST/86707-86714,86731/2018 – ORDER No. A/87022-87030/2018 – Dated:- 1-8-2018 – Hon ble Mr. S.K. Mohanty, Member ( Judicial ) Shri Prasad Paranjape, Advocate, for appellant Shri M.K. Sarangi, Joint Commissioner (AR), for respondent ORDER The learned Commissioner (Appeals), Central Excise, Mumbai vide the impugned order dated 10.1.2018, has disposed of nine appeals filed by the appellant. Since the issue involved in all the appeals is identical i.e. denial of refund benefit provided under Rule 5 of the Cenvat Credit Rules, 2004, the same are taken up for hearing together and a common order is being passed. 2. The appellant is engaged inter alia, in providing outsourced services, which are in the nature of transaction processing services and other related support provided to the overseas clients. The services provided by the appellant are categorized as taxable service under the head business support service . The appellant also registered
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nt, business support, convention, business auxiliary, technical testing and analysis, supply of tangible goods services etc. The refund benefit was denied by the authorities below on the ground that those disputed services are neither conforming to the requirement of the definition of Rule 2(l) of the rules for consideration of input service and that those services have no nexus with the output service provided by the appellant. Further, the refund benefit has also been denied on some of the services, on the ground of non-submission of invoices, non-payment of value of service to the vendors, non-submission of proof regarding payment of service tax on import of services, out of pocket expenses etc. 3. Learned Advocate appearing for the appellant, at the outset, submits that the appellant is not contesting denial of refund benefit in respect of the disputed services viz., catering, event management, business support, convention, business auxiliary, technical testing and analysis, supply
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ound. He further submits that under the amended provisions of Rule 5 (with effect from 1st April 2012), the service provider is not required to establish the nexus between the input and the output services and the refund has to be granted on the basis of formula prescribed under the amended Rule 5 of the rules read with the notification issued thereunder. In this context, the learned Advocate has referred to the letter F.No. 334/1/2012-TRU, dated 16.3.2012 issued by the Tax Research Unit (TRU) of CBEC, clarifying that the field formations cannot insist for establishing the nexus and refund should be granted on the basis of the prescribed formula. As regards non-submission of the invoices before the refund sanctioning authority, he submits that the same were available with the appellant, which can be produced before the original authority, if the matter is remanded back. As regards non-payment of the amount of value of service to the overseas vendors and import of services to the vendor
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d on the disputed services. 5. Heard both sides and perused the records. 6. Since the appellant concedes that it is not contesting disallowance of refund benefit in respect of the taxable services viz., catering, event management, business support, convention, business auxiliary, technical testing and analysis, supply of tangible goods, I hold that the refund benefit denied by the Commissioner cannot be interfered with at this juncture. Thus, the impugned order, so far as it rejected the refund claim in respect of those services, sustains. 7. With regard to the allegation that there is no nexus between the input services viz., renting of immovable property, cleaning service, works contract service, real estate service, management, maintenance or repair service, courier service, the said services are no doubt used/utilised by the appellant for providing the output service, which were exported. For claiming the refund benefit of service tax paid on the input service, Rule 5 of the rules
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f the export turnover to total turnover. Since the TRU has clarified the legislative intent behind the amendment of Rule 5 of the Rules, explaining that no nexus need to be established, denial of refund benefit on sole ground of non-establishment of nexus cannot be sustained for judicial scrutiny. Accordingly, I am of the view that the refund benefit denied to the appellant in respect of those disputed services is not proper and justified and the appellant should be entitled for the benefit of refund of service tax paid thereon. Held accordingly. 8. With regard to the issues in dispute namely, nonsubmission of invoices, non-payment of value of services to the overseas vendors and non-submission of document, showing payment of service tax on the import of services, I find that the relevant documents are presently available with the appellant, which have also been produced by the learned Advocate during the course of hearing. However, since those documents are required to be verified by
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