By TIOL News Service

MUMBAI, FEB 10, 2016: THE Commissioner (Appeals) concurred with the original authority in rejecting the appellants refund claims of Rs.5,31,86,246/-.

The short facts are that the appellant is a unit operating under Software Technology Parks (STP) scheme and is, primarily, an exporter of information technology and information technology enabled services (IT/ITeS) from their registered unit. In addition to exports, a minor portion of their business relates to supply of services to their group entities within India. In the process of executing their contracts with clients in India and abroad, the appellant utilizes input services on which CENVAT credit is availed by them.

Though they utilise a portion of the available CENVAT credit for discharge of tax liability on services rendered domestically, a substantial amount remains unutilized which they sought as refund in terms of Rule 5 of the CCR, 2004.

The lower authorities denied the refund.

It is mentioned that the appellant had taken registration as provider of 'banking and other financial services' on 5th October 2006 and it was only on the 7th May 2007 that 'business auxiliary services' and 'business support services' were incorporated in the service tax registration. Therefore, the impugned order has found the appellant ineligible for refund for the period from 5th October 2006 to 7th May 2007 as availment of credit is contingent upon inclusion of output services in the registration. The lower appellate authority also found that the appellant was undertaking activities from premises other than the one in the registration certificate; that such of the common input services were not segregated in relation to only services which were registered, namely, 'banking and other financial services'; that the services from the registered premises were also not segregated to enable grant of refund in relation to that premises alone.

Before the CESTAT, the appellant cited the decision of the Tribunal in their own case 2015-TIOL-226-CESTAT-MUM wherein in almost identical circumstances, Commissioner (Appeals) had allowed two rejected refund claims & against which revenue came up in appeal but the same were dismissed by Tribunal. The decision in KPIT Cummins Infosystems Ltd. vs. Commissioner of Central Excise, Pune -I - 2013-TIOL-931-CESTAT-MUM is also relied upon.

The Bench observed that the said decision in appellants case was subsequently followed in BNY Mellon International Operations (I) Pvt. Ltd vs. Commissioner of Central Excise in appeal No. ST/707 & 708/2010 - 2015-TIOL-1491-CESTAT-MUM.

Holding that in view of the cited decisions, there was no merit in the impugned order rejecting the refund, the same was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-378-CESTAT-MUM)