By TIOL News Service

ALLAHABAD, NOV 07, 2016: THIS is a Revenue appeal before the High Court.

The respondent Assessee is engaged in providing Information Technology Software Service.

The service provider got registered with Department on 20.12.2011 and claimed refund for the period earlier thereto i.e. April 2011 to September 2011.

The refund Application was rejected by Assistant Commissioner on the ground that the Assessee was not registered during claim period, hence not eligible to take refund of CENVAT Credit under rule 3 of Rules, 2004 read with Rule 4 of Service Tax Rules, 1994.

The Commissioner(Appeals) allowed the appeal and directed AC, CCE to examine the claim of refund subject to verification of documents etc.

While negating the contention of the original authority, the lower appellate authority observed that service provided by Assessee was chargeable to 'Service Tax' under section 65(105) of FA, 1994 but they were not liable to pay service tax in terms of Rule 4 of Export of Services Rules, 2005. Reliance was also placed on the decisions in E-Care India Pvt.Ltd. - 2011-TIOL-590-CESTAT-MAD and mPortal India Wireless Solutions P.Ltd. - 2011-TIOL-928-HC-KAR-ST wherein it was held that service tax registration was not mandatory for refund of accumulated CENVAT credit tax, paid on inputs Services, used for export services.

The CESTAT dismissed the Revenue appeal by relying upon the judgment of Karnataka High Court in mPortal India Wireless Solutions P.Ltd. (supra).

In appeal before the High Court, the Counsel for the Revenue adverted to Notification 5/2006-CE(NT) and the clauses contained in the Appendix thereto.

The High Court remarked that there was nothing in the aforesaid notification which mandated registration as a condition for eligibility to claim refund;that even Form-A nowhere suggests that any such condition must be observed.

After extracting paragraph 7 of the Karnataka High Court decision in mPortal India Wireless Solutions P. Ltd. (supra) and distinguishing the decision of Madras High Court in Sutham Nylocots [ Civil Miscellaneous Appeal No. 926 of 2006, dated 9 January 2014], the High Court observed –

+ We are inclined to accept the view taken by Karnataka High Court considering the fact that in the rules of refund of Cenvat credit, we do not find any such requirement of registration as a condition precedent or eligibility condition for claiming refund.

+ Moreover, if refund is otherwise admissible to a party by a Tax Department, interpretation to the Statute which justify refund to the party must be given for the reason that State or Tax Department cannot be expected to retain Revenue which legally is refundable to the party. It should not be allowed to be retained when legally Revenue is not entitled to such money.

+ In Formica India Division v. Collector of Central Excise - 2002-TIOL-599-SC-CX Court has also observed that refund should not be denied on technical grounds. This shows that a view which does not contradict with any express fiscal provision, should be taken in favour of Assessee, if there is any scope of two views.

The Revenue appeal was dismissed.

(See 2016-TIOL-2741-HC-ALL-ST)