Service Tax Dept Cannot Take Different Stand to Disallow CENVAT Credit When Refund Sanction Not Challenged: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”) held that the service tax department cannot take a different stand to disallow CENVAT Credit when refund sanction had not been challenged.

The appellant, Teg India Pvt. Ltd., are engaged in Support Services to Teg U.K. These services include Operational Support in relation to Customer Liaison Services, Marketing and Promoting Services, Administrative Services, Collection of Payments, Invoicing, etc.

They had been sanctioned refund claims under Rule 5 of CCR. These were not appealed against the Revenue. Afterwards, two show cause notices were issued, raising the demand that the services rendered were in the nature of Intermediary Services and cannot be considered as ‘export’. The demands were confirmed via impugned order 20.04.2020.

The counsel for the appellants submitted that an inconsistent stance has been taken by the Revenue Department while not challenging the sanctioned refund but issuing show cause notices. Further, the conditions for an ‘Intermediary Service’ have not been met by the appellants as it was an advertising agency/company.

The bench, comprising S. S. Garg (Judicial) and P. Anjani Kumar (Technical) held that the orders that have sanctioned the refunds have not been reviewed or appealed against. Therefore, since the orders have not been set aside, it is not open to question the CENVAT credit availed without challenging those orders that sanctioned the refund. Reliance from the Madras High Court in Eveready Industries India Ltd case from 2016 has been taken to justify this observation.

Further, since no case has been made to support the view that suppression, mis-statement, mis-representation, fraud, collusion, etc. has been made, it has been held that the impugned orders cannot be sustained.

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