In a major relief to Blackberry India Private Limited, the Delhi High Court ruled that services except in Rule 3(1) of Export of Services Rules falls under ambit of Export of Taxable Services.
The Revenue has filed the present appeal under Section 35G of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 impugning the final order passed by the Customs, Excise and Service Tax Appellate Tribunal (‘CESTAT’).
The respondent, ‘BlackBerry India’ was registered with the Department for payment of service tax in respect of Business Auxiliary Services provided by it. BlackBerry India had filed claims for refund of unutilised CENVAT Credit amounting to ₹8,55,34,345/-. The said Credit was accumulated on account of various input services such as security services, manpower services, sponsorship services, legal consultancy services etc., which were utilized by BlackBerry India for providing output services – Business Auxiliary Services.
The Adjudicating Authority held that for the period prior to 01.07.2012, the benefit of export services was covered under Rule 3 of the Export of Service Rules, 2005 and the same did not extend to services covered under Section 65(105)(zzb) of the Finance Act. Consequently, BlackBerry India’s claim for CENVAT Credit for the period prior to 01.07.2012 was not tenable.
Against this Blackberry India preferred an appeal before the CESTAT. The question to be considered by the learned CESTAT was whether the services rendered by BlackBerry India were covered within the scope of export of services under Rule 3 of the Export of Taxable Service Rules, 2005.
A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan observed that “The conclusion of the Adjudicating Authority that the services covered under Section 165(105)(zzb) of the Act were excluded from the scope of Export of Taxable Services under Rule 3(1) of the Export of Service Rules, 2005 is, plainly, erroneous.
“The CESTAT has rightly concluded that all services except those specifically mentioned in Rule 3(1) of the Export of Services Rules, 2005 are covered within the scope of Export of Taxable Services. The Adjudicating Authority had clearly misread the said Rule” the Court concluded.
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