Refund Cannot Be Denied for Lack of BRC/FIRC: CESTAT Sets Aside Rejection in Service Tax Case [Read Order]

The bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, set aside the order of the Commissioner (Appeals) and allowed the refund claim of accumulated Cenvat Credit under the service tax regime.

GlobeOp Financial Services India Pvt. Ltd., the appellant, is engaged in providing support services and information technology software services. The company filed a refund claim of ₹26,89,302 for the period April 2017 to June 2017 of accumulated Cenvat Credit under Notification No. 27/2012-CE (NT) dated 18 June 2012.

The adjudicating authority rejected the refund claim vide order dated 22 October 2019 on four grounds:

(a) input services were received and export invoices were issued from an unregistered premises,

(b) Cenvat Credit was debited before the filing of the refund application,

(c) non-submission of Bank Realisation Certificate/Foreign Inward Remittance Certificate, and

d) the refund claim was invalid as the business had been sold by way of slump sale with effect from 1 January 2018, whereas the application was filed on 27 March 2018.

The Commissioner (Appeals) upheld this rejection, prompting the appellant to approach the Tribunal.

Represented by Vikas Agarwal and Kenil Dharod, the Appellant argued that the additional premises had already been sought to be included in the service tax registration by way of an ST-1 application filed on 2 February 2016. However, the inclusion remained pending with the department until the transition to Goods and Services Tax on 30 June 2017, and hence refund could not be denied on this ground.

It was contended that the debit of Cenvat Credit was made in advance on 30 June 2017 as post GST migration any balance would lapse, and the requirement under the notification was only that the Cenvat Credit be debited before filing the refund claim.

Concerning the foreign exchange condition, they submitted that although Bank Realisation Certificates or Foreign Inward Remittance Certificates were not furnished, adequate proof of receipt of convertible foreign exchange was placed on record.

It was argued that the refund claim pertained to April-June 2017, when the business was with the appellant, and the subsequent slump sale in January 2018 had no bearing on the eligibility for refund.

Represented by Dhananjay Dahiwale, the Revenue reiterated the reasoning adopted by the Commissioner (Appeals) in rejecting the refund claim and supported the impugned order.

The Bench of Anil G. Shakkarwar, Technical Member, held that the appellant’s contentions carried merit. The Tribunal observed that the attempt to include the premises in the registration was evident from the application made on 2 February 2016, and the pendency at the department’s end could not be used against the appellant.

It further held that the condition in the notification merely required debit of Cenvat Credit before filing the refund claim, which had been complied with, and that proof of receipt of convertible foreign exchange was furnished despite absence of BRC/FIRC.

The slump sale effective January 2018 was found to be irrelevant since the refund related to April–June 2017.

Accordingly, the Tribunal set aside the order of the Commissioner (Appeals).

Thus, the appeal was allowed with consequential relief to the appellant.

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