2019 (2) TMI 595 – CESTAT CHENNAI – TMI – Refund of service tax paid – accommodation services – air travel agency service – denial on the ground of nexus – Rule 5 of CENVAT Credit Rules, 2004 – Held that:- In fact, there has been no show cause notice issued by the department alleging that the appellants are not eligible for credit of these services. When the department has not raised any allegation by issuing show cause notice that the appellant is not eligible for credit, they cannot go into the admissibility of the credit during the process of refund claim – Further, as per amended provisions of Rule 5, it is not necessary to establish the nexus with the output service – The Board circular also clarifies the same.
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The rejection of refund claim is without any basis and unjustified – Appeal allowed – decided in favor of appellant. – Appeal Nos. ST/42370 & 42371/2018 – Final Order Nos. 40249-40250/2019 – Dated:- 7-2-2019 – Ms. Sulekha Beevi C.S., Member (Judicial) Shri Harish Bi
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Input services involved Short term accommodation and hotel room charges 4,33,451/- 3. He referred to Rule 5 of CENVAT Credit Rules, 2004 as amended and submitted that the said Rule nowhere uses the term nexus . In fact, after the amendment brought forth in Rule 5 with effect from 1.4.2012, any input services are eligible for credit for the person who is providing the output service. The word used has been omitted by such amendment. The authorities below have rejected the refund claim stating that the appellant has not established any nexus between the input services and the output services. It is also opined by the authorities below that the services do not contribute or add value to the output services provided by the appellant. He relied upon the decision of the Tribunal in K Line Ship Management (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai – 2017-TIOL-2406-CESTAT-MUM to argue that the department cannot reject the refund claim by stating that the credit is not eligible.
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he impugned order. 5. Heard both sides. 6. The issue is with regard to the rejection of refund claim in respect of short-term accommodation service and air travel agency service. The appellant has pleaded that these services were used for accommodation of the employees when they were undertaking business travel and therefore is eligible for refund. The Commissioner (Appeals) has rejected the refund claim holding that the appellant has not proved the nexus of the input service with the output service and that there is no value addition of these services for the output services. In fact, there has been no show cause notice issued by the department alleging that the appellants are not eligible for credit of these services. When the department has not raised any allegation by issuing show cause notice that the appellant is not eligible for credit, they cannot go into the admissibility of the credit during the process of refund claim. Further, as per amended provisions of Rule 5, it is not
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that the lower authorities has not deal with this issue. Lower authorities have gone into the admissibility of the Cenvat Credit already availed. In these circumstances, it is not possible to uphold the impugned order. If the lower authorities wanted to challenge the admissibility of credit, the same cannot be done while examining the refund claim of the appellant, without following the due process prescribed. 5. Notification No. 5/2006 has been issued under the said Rule. It is seen that Rule 5 and the Notification issued there under prescribed refund of Cenvat availed on (i) inputs and input and input services used in providing out put services payment of service tax, subject to conditions and limitations set out in Notification no.5/2006. In these circumstances, the only test of admissibility of refund can be the Rule 5 and notification issued there under. I find that the impugned order instead of dealing with this rule and notification issued there under, deals with the admissibil
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