The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that objection on eligibility of credit cannot be raised at time filing of refund claim, thereby granting relief to M/s Infosys Technologies Ltd, the respondent.
The Respondent, M/s Infosys Technologies Ltd., Bhubaneswar, Odisha, were engaged in the activity of providing Maintenance of Software Services classifiable under Management, Maintenance and Repair Service. The Respondent was operating as a 100% EOU registered under Software Technology Park (STP) Scheme for export of the above taxable service.
The Respondent filed a claim for refund of Cenvat Credit for an amount of Rs.90,88,508/-, in terms of Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE (NT) dated 14.03.2006, for the quarter ending January, 2008 to March, 2008 on the ground that they were not in a position to utilize the Cenvat Credit availed on the said input services.
In their grounds of appeals, the Appellant(Department) stated that the adjudicating authority has examined the admissibility or inadmissibility of the refund of Cenvat credit claimed by the Respondent in respect of the thirteen services and observed that only two services i.e. the Management, Maintenance or Repair services and Telecommunication Service were related to development of software and eligible and allowed the refund of Rs.2,78,649/- in respect of the said two input services and rejected the refund claim of Rs.88,09,859/- in respect of the remaining eleven services.
It was further submitted that in this case, sanctioning authority i.e. Assistant Commissioner was not satisfied with the submissions submitted by the Respondent and rejected the refund claims in respect of the eleven input services. The Commissioner (Appeals) has erred in allowing the refund of the input services which were not used in providing the output services. Accordingly, the Department prayed for setting aside the impugned order.
The Respondent submitted that Notification No. 5/2006-CE(NT) had been amended vide Notification No. 7/2010-CE(NT) dated 27.02.2010 so as to substitute the words “used in” with the words” used in or in relation to” in clause (a) and the word “used in “with the words “used for” in clause (b) of the said Notification. Further, the Board vide letter No. D.O.F. No. 334/1/2010-TRU dated 26.02.2010 has also clarified that these amendments are made applicable retrospectively with effect from 14.03.2006.
A Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member observed that “We observe that prior to 1.4.2011 the ‘input service’ definition in Rule 2(l) of the Cenvat Credit Rules, 2004 was very wide as it was an inclusive definition and covered the expression “activities relating to business”. This covers all such ‘input services’ used by the Respondent in providing their output services. Accordingly, we hold that there is no infirmity in the impugned order passed by the Commissioner (Appeals) allowing the refund.”
“We hold that when no objection was raised at the time of availing and utilizing the credit, the objection regarding the eligibility of credit cannot be raised at the time of filing of the refund claim, to deny the refund claim. There cannot be different yardsticks for establishing the nexus for taking of credit and for refund of credit” the Bench concluded.
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