M/s Morgan Stanley India Financial Services Pvt. Ltd. Versus Commissioner of CGST, Mumbai East
Service Tax
2019 (2) TMI 19 – CESTAT MUMBAI – [2019] 71 G S.T.R. 226 (CESTAT – Mum)
CESTAT MUMBAI – AT
Dated:- 25-1-2019
APPEAL NO. ST/87641 & 87737/2018 – A/85196-85197/2019
Service Tax
SHRI AJAY SHARMA, MEMBER (JUDICIAL)
Shri Prasad Paranjape, Advocate with Shri Suyog Bhare, Advocate for Appellant
Shri Onil Shivdikar, Assistant Commissioner (AR) for Respondent
ORDER
These appeals have been filed by the Appellant from the Order-in- Appeals dated 04.04.2018 passed by the Commissioner of CGST & Central Excise (Appeals-II), Mumbai by which the learned Commissioner partly allowed the appeal filed by the Appellant and rejected the claim of CENVAT credit qua “Air Travel Agent Services”, “Banking & Financial Services”, “Business Auxiliary Services” and “General Insurance Services” on the ground that there is no nexus between the input services and output services and the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
dvantage Services Pvt. Ltd. He also produced the copy of the said order.
4. Learned Authorised Representative appearing on behalf of the Revenue reiterates the findings recorded in the impugned order and prayed for dismissal of the appeal.
5. During the course of hearing learned Counsel for the Appellant has also produced a chart indicating the amount in issue against each head, the said chart is taken on record and is extracted as under:-
Sr. No.
OIO Date and Page No.
Period
Nexus Issue
Excess Refund Claimed
Total
General Insurance Services
Air Travel Agent Services
Storage & Warehousing Services
Banking or Financial Services
Business Auxiliary Services
A
B
C
D
E
F
G
H
I
J
1
23.12.15 (Pg. 27)
Oct 14 to Mar 15
–
63,559
12,666
3,872
1,172
8,41,890
9,23,159
2
19.07.16 (Pg. 45)
Apr 15 to Sep 15
7,70,288
77,662
8,806
1,439 831
–
8,59,026
Total
7,70,288
1,41,221
21,472
5,311
2,003
8,41,890
17,82,185
The facts of the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
company are at financial risk which may arise against them in the event of any fraud is committed in the investee company. Ultimately the said financial liability has to be borne by the Appellant, therefore in order to protect themselves, the Appellant has taken an insurance policy from Tata AIG in its own name with respect to claim that may be made against its employees who are appointed as Nominee Director/Alternate Director in the investee company. The said insurance policy is taken so that the insurance company can pay the losses of the Appellant which may arise from the arrangement of appointing its employee as Nominee Director/Alternate Director in the investee company, during the course of providing services to its overseas clients. Therefore, it is clear that the insurance policy is taken by the Appellant in relation to the financial risks during the course of business that may arise upon the appointment of the employees as Nominee Director/Alternate Director in the investee co
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
deliver qualitative services to them. These meetings are essential for the business of the Appellant and in its absence, the business of the Appellant is going to be affected. Therefore, in my view this input service as availed by the Appellant in connection with its business are essential for the provision of output services and therefore the Appellant is entitled for refund of Service Tax on the said services.
7. The “Storage and Warehousing Services” have been availed by the Appellant for storage of important business related information and the files which are very essential for smooth and organise functioning of business. “Banking & Financial Services” had been availed by the Appellant for availing foreign exchange conversion services for its employees travelling abroad for the business of the Appellant and the “Business Auxiliary Services” have been procured by the Appellant for repairing of the cellular phone of its employees who have been provided with the cellular phone/mobi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
on account of non-reversal of erroneous credit availed by the Appellant in their ST-3 return. It is admitted fact that the Appellant had erroneously availed excess CENVAT credit to the tune of Rs. 7,70,687/- in the month of August, 2014 at the time of filling Service Tax return for the period April, 2014 to September, 2014. According to the Appellant they had identified this error after the due date for revision of Service Tax return for the aforesaid period. But while filing the Service Tax return for the period October, 2014 to March, 2015 the Appellant had reversed the CENVAT credit which was erroneously taken by them during the month of August, 2014 from the total availment for the month of October, 2014 and the CENVAT credit availmnet for the said month of October, 2014 was done in the following manner:-
Particulars
Amount
CENVAT credit availed during the month of October 2014
A
11,29,175
Less: Erroneous availment of CENVAT credit in the month of August 2014
B
(7,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
____________
Total Turnover
x
CENVAT credit availed during the period as reduced by any reversals required under Rule 3(5C) of the CENVAT Credit Rules, 2004
The amount arrived by the aforesaid formula is maximum amount that can be claimed as refund under Rule 5 ibid. However, the actual sanction amount depends on other conditions and restrictions prescribed under the Notification No. 27/2012-CE (NT) dated 18.06.2012. Para 2(g) of the said notification prescribes that the sanction amount should be subject to quantitative restriction as follows:-
“2(g) the amount of refund claimed shall not be more than the amount lying in balance at the end of quarter for which refund claim is being made or at the time of filling of the refund claim, whichever is less.”
9. Both the Authorities below have erred in considering the amount of unutilised credit for the quarter, which was calculated by deducting the amount of domestic services tax liability for the period discharged through utilisation
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
27/2012-CE (NT) dated 18.06.2012 and Rule 5 of CENVAT Credit Rules, 2004 passed the following order:-
“xxxx
xxxx
xxxx
8. ……………………………. As regard the issue that whether the proposal of the Revenue to reduce the cenvat credit utilize for payment of service tax on the domestic clearances of the services for the purpose of considering the net cenvat credit availed for the purpose of formula, I do not agree with the Revenue's proposal for the reason that as per Notification No. 27/2012- CE(NT) dt. 18.6.2012 in para 2(g) it provides as under:
“2. Safeguards, conditions and limitations – Refund of CENVAT Credit under rule 5 of the said rules, shall be subjected to the following safeguards, conditions and limitations, namely:-
(a)……………
(b)……………..
(c)……………..
(d)……………..
(e)……………..
(f)………………..
(g) the amount of refund claimed shall not be more than the amount lying in balance at the end
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tter of undertaking, or a service provider who provides an output service which is exported without payment of service tax, shall be allowed refund of CENVAT credit as determined by the following formula subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette:
Refund amount =
(Export turnover of goods + Export turnover of services)
_______________________
Total turnover
x
Net CENVAT credit
Where,-
(A) “Refund amount” means the maximum refund that is admissible;
(B) “Net CENVAT credit” means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider reduced by the amount reversed in terms of sub-rule (5C) of rule 3, during the relevant period;
(C) “Export turnover of goods” means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ve formula, and definition of net cenvat credit, it is clear that only cenvat credit availed on the inputs and inputs services by the manufacturer or the output service provider should be taken as 'net Cenvat credit'. The only amount which can be reduced is the amount which is reversed in terms of Sub-rule (5C) of Rule 3 during the relevant period. Therefore no amount which was utilized for payment of service tax in respect of domestic provision of service from cenvat amount is required to be reversed as per formula. The net sum will be the centvat credit attributable to export only. Therefore the formula itself taken care to reduce the element of cenvat credit attributable to the service provided in the domestic market, therefore the proposal of the revenue is based on presumption and assumption which has no authority therefore this proposal is also rejected and refund claim cannot be disputed on this count.”
11. In view of the facts and the decision mentioned above, it is clear tha
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =