By TIOL News Service

MUMBAI, MAR 17, 2016: THE issue is regarding refund claim filed in respect of service tax credit on the input services used for providing output services i.e. Information Technology Services.

The adjudicating authority has, against the refund claim of Rs.21.40 lakhs, sanctioned a refund of Rs. 6.95 lakhs. The Commissioner (A) sanctioned a further refund of Rs.3 lakhs and 5.97 lakhs respectively. The respondent has not filed any appeal against this order.

However, Revenue is unhappy and is in appeal.

The AR submitted that Rs.3 lakhs is the service tax paid in respect of services which were rendered to the respondent's Chennai branch before it was registered and, therefore, respondent could not have co-related the use of CENVAT credit in respect of the said output services. As regards the amount of Rs.5.97 lakhs, it is submitted that the said credit is in respect of rent-a-cab service, interior design service, rentals paid for the office premises, professional fees paid to C.A., purchase of foreign currency for the staff traveling abroad and the same do not qualify as "input services" since they do not play any role in providing "output services".

The respondent submitted that the issue involved is no more res integra as Tribunal in the case of J.P. Morgan Services India Pvt. Ltd. - 2015-TIOL-226-CESTAT-MUM has held that registration is not pre-requisite for availment of CENVAT credit which is subsequently sought as refund; that in the case of Morgan Stanley Advantage Services Ltd. - 2014-TIOL-2289-CESTAT-MUM it is held that various services like travel agent service, consultancy service etc. are used for rendering of output service viz. Information Technology Services, hence refund needs to be sanctioned.

The CESTAT held that the Revenue appeal is devoid of merits in view of the following -

++ As regard the CENVAT credit approximately of Rs.3 lakhs, the only reason which is advanced by the Revenue is that the Chennai branch of the respondent was not registered with the department. It is undisputed that the said branch was subsequently registered. [ J.P. Morgan Services India Pvt. Ltd. (supra) relied upon - In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law.]

++ Refund of an amount of service tax paid on various services is admissible in view of Division Bench decision in the case of Morgan Stanley Advantage Services (supra).

Holding that both the issues are squarely covered by the decisions of the Tribunal and the impugned order is correct and does not require any interference, the Revenue appeal was rejected.

(See 2016-TIOL-638-CESTAT-MUM)