Relief for AGS Health: CESTAT Rules Registration Not Mandatory for Refund of Unutilized CENVAT Credit on Exported Services [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax registration is not a precondition for claiming a refund of unutilized CENVAT credit on exported services.

AGS Health Private Limited, the appellant, is a 100% export-oriented unit engaged in providing medical billing, insurance verification, medical coding, and related back-office support services to healthcare providers in the United States.

Since the services qualified as exports under the Export of Service Rules, 2005, the appellant was not liable to pay service tax and initially did not obtain registration. After its pilot projects were successful, the appellant obtained service tax registration on December 17, 2011, under “Business Auxiliary Service” and “Business Support Service.”

The appellant filed a refund claim of Rs. 29,06,290 under Rule 5 of the CENVAT Credit Rules, 2004, for unutilized input service tax credit related to the period April to December 2011. The adjudicating authority rejected the refund, holding that credit prior to the date of registration could not be considered.

The Commissioner (Appeals) upheld the rejection, reasoning that the appellant was not entitled to claim a refund for services rendered before registration.

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The appellant’s counsel argued that neither Rule 3 nor Rule 5 of the CENVAT Credit Rules requires a service provider to be registered before availing or claiming a refund of credit. It was further argued that the law does not mandate registration for exporters of services who are not liable to pay service tax. The counsel relied on several decisions, including mPortal India Wireless Solutions Pvt. Ltd. v. Commissioner of Service Tax, Bangalore, and Saipem India Projects Ltd., which allowed refunds even for periods prior to registration.

The department’s representative maintained that refund eligibility under Notification No. 5/2005-CE(NT) required registration of premises and that credit relating to the period before registration was not admissible.

The two-member bench comprising Vasa Seshagiri Rao (Technical Member) and M. Ajit Kumar (Judicial Member) observed that the issue of refund of accumulated CENVAT credit for periods prior to registration had already been decided in earlier cases such as mPortal India Wireless Solutions Pvt. Ltd. The tribunal explained that in the absence of any statutory provision requiring registration for availing or refunding CENVAT credit, denial of refund on that basis was not justified.

The tribunal pointed out that the appellant had exported services and duly filed the refund claim after obtaining registration. Since the law does not impose any such precondition, the refund could not be denied. The tribunal set aside the impugned order and allowed the appeal with consequential relief as per law.

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