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ST - Even if output services which are exempted services are exported, service tax paid on input service is eligible for refund: CESTAT

By TIOL News Service

MUMBAI, MAR 20, 2017: THE undisputed facts are that the appellant had taken credit of service tax paid on input services received and consumed in providing output services of call centre which was undisputedly exempted. The said credit was taken in April 2006 after the call centre services were made taxable w.e.f. 01/03/2006 and the said amount of credit was utilised for payment of service tax on exported taxable service of BAS during the period October 2006 to February 2007.

Both the lower authorities have rejected the claim of the appellant and ordered for recovery of the CENVAT credit availed in April 2006 as the same were procured during the period when the call centre services was exempted.

Before the CESTAT, the appellant submits that the issue of eligibility to credit in respect of call centre service exported prior to 01/03/2006 has been settled by various decisions of the Tribunal; that in the case of IBM Daksh Business Process Service (P) Ltd. - 2014-TIOL-648-CESTAT-DEL the department rejected the refund under Rule 5 on the ground that the service provided by the appellant is exempted under Notification No. 8/2003-ST but the Tribunal had allowed the refund.

The Bench held that the stand of the department is incorrect as even if the output service which are exempted services and are exported, service tax paid on input service is eligible for the refund and which is the law decided by the KarnatakaHigh Court in the case of mPortal India Wireless Solutions Pvt Ltd - 2011-TIOL-928-HC-KAR-ST.

Holding that the issue is squarely covered by the decisions (supra), the impugned order was set aside and the appeal was allowed with consequential relief.

(See 2017-TIOL-898-CESTAT-MUM)


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