CENVAT Credit Refund can't deny for Judicial Scrutiny: CESTAT [Read Order]

The Mumbai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)has held that the CENVAT credit refund can't deny for judicial scrutiny.

Shri R. Kumaravel appeared for the appellant and Shri Sunil Kumar Katiyar appeared for the respondent.

M/s. Sequoia Capital India Advisors Pvt, the Appellant challenged the Order-in-Appealdated 11.3.2019 passed by the Commissioner (Appeals)-II, Central Tax, CGST Mumbai by which the rejecting of refund amount of Rs.22,88,870/- was upheld. 

The appellants are providers of Financial Investment Advisory Services to their overseas clients. The entire output services of the appellants were provided to their overseas clients and no part of the output services was provided to any client in India. Two refund claims were filed by the appellants for the period October 2016 to December 2016 and January 2017 to March 2017 respectively totalling Rs.2,10,44,635/-.

The Adjudicating Authority vide Order-in-Original dated 17.4.2018 rejected the refund claim to the tune of Rs.36,86,969/- some on the ground that the premises are not registered and some rejection was on the ground that the appellants have failed to establish any nexus of the input services in issue with the export of service. On Appeal, the Commissioner allowed the refund to the tune of Rs. 13,98,099 /- but upheld the rejection on Rs.22,88,870/- on the ground of ‘no nexus’ with the output service. 

The appellant contended that the services for which the refund has been rejected by the appellate authority are car parking services, coffee machine, travelling expenses, event management service, gardening, and hotel accommodation on the ground of no invoice present.

It was settled legal position that in absence of any notice for recovery as provided by Rule 14 ibid the refund claimed by the assessee under Rule 5 cannot be denied. The CESTAT bench observed that the amended provisions of Rule 5 of the rules have been clarified by the Tax Research Unit of the Department of Revenue vide Circular dated 16.3.2012. 

It has been stated therein that the nexus between the input service used in the export of service should not be insisted upon and the benefit of refund should be granted based onthe ratio of export turnover to total turnover demonstrated by the assessee. 

A Coram comprising of Mr Ajay Sharma, Member (Judicial) observed that the department has not specifically objected to the fact of computation of export turnover to the total turnover by the appellant and denied the refund benefit solely on the ground that there is no nexus between the input service and the output service exported by the appellant.

While allowing the appeal, the CESTAT bench held that “as per the statutory mandates read with clarification furnished by TRU, rejection of refund benefit by the authorities below cannot be sustained for judicial scrutiny and set aside the impugned order.”

To Read the full text of the Order CLICK HERE

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