By TIOL News Service

NEW DELHI, FEB 15, 2017: THE appellants are engaged in providing "business auxiliary service", "business support service", "management", "maintenance or repair service", "management consultancy service" etc.

They have provided various services broadly called call centre services, back office data processing services (BPO) to American Express International Inc. located outside India.

The appellants availed credit of tax paid on various input services availed by them. They have paid service tax on output services provided in India.

In order to claim refund of unutilized credit lying in their accounts, the appellants filed applications in terms of Rule 5 of CCR, 2004 r/w Notfn. 5/2006-CE (NT) dated 14/03/2006. The claims pertain to period April 2006 to December 2008.

The lower authorities rejected the claim of the appellant.

The appellant is before the CESTAT and submits that similar services were provided by the appellant to Indian clients and they have been discharging service tax under BAS/BSS and which has been duly accepted by the Department; therefore,rejection of the refund claims on the ground that services rendered to foreign affiliates are not falling under taxable category is legally untenable.

It is further submitted that on identical set of facts on the same services, the appellant filed refund claims (in excess of Rs.65crores) and the same have been sanctioned for the period April 2012 to June 2012, April 2014 to September 2014 and October 2014 to September 2015. And since the orders sanctioning such refunds have been accepted by the Revenue, the present rejection is improper.

The AR, while reiterating the findings of the lower authorities submitted that the taxability of output service rendered by the appellant to their parent company has to be examined in terms of the agreement entered into; that the terms of agreement and the invoices raised for rendering service did not bring out categorically the nature of service provided by the appellant for specific classification of tax liability;that since no specific classification of taxable service could be arrived at, the lower Authorities had rightly rejected the refund claims.

The Bench observed -

+ The lower Authorities rejected their claim only on the ground that they could not identify the specific classification of services rendered by the appellant to the foreign affiliates and as such these services were held as non-taxable.

+ The agreement and the documents submitted by the appellant make it clear regarding the scope of services rendered by the appellant. Admittedly, the appellants are providing what is generally called as 'call centre service' or 'BPO service' to their foreign affiliates. On a perusal of the agreement entered into by the appellant with the service recipient, we note the nature of service cannot be disputed.

+ The lower Authorities have repeatedly mentioned that they are not able to identify the exact classification and taxability of the services rendered by the appellant to their foreign affiliates. In this connection it is pertinent to note that for similar set of services, the appellant were discharging service tax when they are rendering the same in India to Indian clients .

+ The tax liability discharged under BAS and BSS have been accepted by the Revenue and there is no dispute in this regard. Strangely, when same set of services were rendered to a foreign clients the lower Authorities have arrived at the decision that the services rendered by the appellant could not be categorized under any tax entry under Finance Act, 1994, because of lack of clarity and failure of the appellant to support his case.

+ Such assertions are without basis and the lower Authorities have fallen in complete error in examining the basic issues involved in the dispute. In fact it would appear that substantial effort and discussion by the Original Authority was to examine various general principles that are not having direct relevance to the case.

+ Admittedly, on the same set of facts the Department sanctioned refund claims for the subsequent periods and accepted the fact that the appellants are providing taxable service for foreign clients and the accumulated Cenvat credit availed on input services is to be refunded to them. On this ground alone, the stand taken by the lower Authorities in the impugned order is liable to be set aside. The Revenue cannot take different approach on the same set of facts during different periods.

Holding that the impugned order cannot be legally sustained, the same was set aside and the matter was remanded to the original authority.

(See 2017-TIOL-445-CESTAT-DEL)