Revenue Cannot Reclassify Input Services Or Deny CENVAT Credit While Sanctioning Refund: CESTAT Chandigarh
The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that revenue cannot reclassify input services or deny CENVAT credit at the stage of sanctioning a refund, without first challenging the assessment or invoking Rule 14 of the CENVAT (Central Value Added Tax) Credit Rules, 2004. S.S. Garg (Judicial Member) and P. Anjani Kumar...
The Chandigarh Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that revenue cannot reclassify input services or deny CENVAT credit at the stage of sanctioning a refund, without first challenging the assessment or invoking Rule 14 of the CENVAT (Central Value Added Tax) Credit Rules, 2004.
S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) opined that it is not open for the Revenue to decide the classification of input service or to decide the eligibility of such input service at the time of sanctioning the refund.
In the case at hand, the assessee/appellant was engaged in the provision and exports of services such as Back Office Operations (including Finance and Accounting Services), Human Resources Services, Geographic Information System Services, Data Processing Services and Support Centre Services to their overseas group company.
The assessee filed a refund claim of Rs.73,71,769/-, under Rule 5 of CCR, 2004, read with Notification No.5/2006-CE (NT) dated 05.03.2006, for the period October 2008 to December 2008.
A show-cause notice was issued to the assessee, proposing to deny the CENVAT credit on the grounds that the credit was availed for Legal Consultancy Services, which became taxable from 1st September 2009.
Deputy Commissioner of Service Tax, New Delhi, sanctioned a refund of Rs.49,14,850/- and rejected the balance claim of Rs.24,56,919/-. Being aggrieved by the order, the assessee preferred an appeal before the Commissioner (Appeals), which was rejected.
The assessee submitted that the major portion of the refund rejected pertains to the Management or Business Consultant Service, which was wrongly claimed to be the Legal Consultants Service by the Revenue. As per the assessee, the activity performed by the assessee is not Legal Consultancy Services but Management or Business Consultant Service.
The revenue argued that the service rendered by the assessee is a Legal Consultancy Service and not a Management or Business Consultant Service.
The Tribunal found that the Revenue attempts to deny the CENVAT credit while deciding an application for refund, without challenging the assessment/self-assessment order in this regard, and without taking recourse to Rule 14 of the CENVAT Credit Rules, 2004.
The bench further opined that the nature of the service rendered by the assessee is Management or Business Consultant Services rather than Legal Consultancy Services.
The bench disagreed with the revenue that the refund of Rs.9,30,378/- is not admissible to the assessee as the payment was at a later date.
In view of the above, the Tribunal allowed the assessee's appeal and rejected the revenue's appeal.
Case Title: M/s OSC Export Services Pvt. Ltd. v. Commissioner of Central Goods & Service Tax, Gurugram
Case Number: Excise Appeal No. 141 of 2012
Counsel for Appellant/ Assessee: Deepak Thackur
Counsel for Respondent/ Department: Yashpal Singh