By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Prior to introduction of POTR, the “relevant date” u/s. 11B Central Excise Act 1944 for the purpose of claiming refund under Rule 5 of the CENVAT Credit Rules, 2004 read with notification no. 5/2006-C.E. (N.T.), dated 14-03- 2006, in case of export of service shall be the date on which payment for exported service is received.
Facts:
The appellant a 100% EOU of applied for refund of CENVAT credit for the period 7th December to 9th August for service tax paid on input services. The claim was rejected on the ground of time-bar as refund application was made beyond one year from the date of export. Relying on notification no. 5/2006-CE (N.T) revenue contended that section 11B of the Central Excise Act 1944 governs the time limit for filing refund claim and as per the said section refund claim should be filed within one year from the date of export of services. It was also contended that there was no nexus between the input services and the output services and when the appellant is not eligible for CENVAT credit itself there is no question of refund.
Held:
Relying on the decision in case of CCE vs. Eaton Industries (P.) Ltd. [2011] 9 taxmann.com 185 while examining section 11B of the Central Excise Act, it was held that, without clearance of goods, the liability to pay tax does not arise and in the absence of liability to pay tax, further proceedings also would not happen. Thus, if the taxable event is manufacture, the calculation of tax took place after removal than it is the date of removal which is relevant. In the case of goods exported, the relevant date would be the date of export of goods but the same may not apply for the purpose of refund [(sic) in case of services] as the liability to pay tax arises under service tax till the law was amended, only when the consideration was received. Therefore, it is appropriate that the relevant date for calculating the time limit u/s. 11B also should be the date on which consideration is received.
As regards nexus with output services and the admissibility of CENVAT credit, the matter was remanded for calculating the refund claim following the decision of the Tribunal in Infosys Ltd. vs. CST [ST/2045/2011, ST/1912/2012 & ST/26109/2013, Final Order Nos. 20282, 20294 & 20293/2014 dated 26-02-2014] wherein the definition of input services is considered and admissibility of CENVAT credit in respect of various services and the rationale to take such a view has been discussed.
[Note: Readers may note that this decision pertains to period when Point of Taxation Rules, 2011 (POTR) were not in place and liability to pay service tax was on “receipt bases”. However, principle laid down in this case as regards “relevant date” u/s. 11B of CE Act for the purpose of claiming refund in case of export of service is equally applicable even today in the light of POTR]
