I. TRIBUNAL
15 M/s. Suraj Forwarders and Shipping Agencies vs. The Principal Commissioner of GST and Central Excise [2021-TIOL-844-CESTAT-Mad] Date of order: 10th December, 2021
When service tax paid twice is established, the refund cannot be denied on the ground of limitation
FACTS
The appellant inadvertently paid service tax under the wrong service tax registration number. At the time of scrutiny of the returns, it was found that the payment was made under the wrong service tax number. Thereafter, they discharged the service tax once again under the correct number. A refund claim was filed for the refund of the amount wrongly paid. A show-cause notice was issued proposing to reject the claim as the same was barred by limitation under section 11B of the Central Excise Act, 1944. After due process of law, the original authority rejected the refund claim. On appeal, the Commissioner (Appeals) upheld the same. The appellant is thus before the Tribunal.
HELD
The Tribunal noted that the service tax was paid twice by the appellant for the very same taxable value. The department directed them to pay the tax again as their in-house formalities do not allow adjustment of tax wrongly paid towards one Commissionerate to another. The appellant again paid service tax mentioning the correct service tax registration number. It is clear that the department has collected service tax twice. This is not permissible under the law. Relying on several decisions, the Tribunal held that the rejection of claim on the ground of limitation is not justifiable and therefore deserves to be set aside forthwith.
16 M/s Cades Digitech Pvt. Ltd. vs. Commissioner of Central Tax [2022-TIOL-52-CESTAT-Bang] Date of order: 4th January, 2022
Reimbursement of expenses in the nature of salary, rent, travelling expenses etc., from the head office to the branch office cannot be considered a service provided by the head office to the branch
FACTS
The appellants are engaged in providing “Consulting Engineers Services” to their customers through their branches located outside India namely USA, Korea, Japan, UK, Germany etc. Their branches are manned by their own employees, and they are reimbursing the expenses on account of salaries, rents, other and other expenses etc. They are also receiving consideration/remuneration for the Consultancy Services rendered abroad to their customers through their branches. Remuneration earned in this regard is treated as export of service, and no dispute is made on this count. Revenue has raised an issue stating that the appellants are paying money to their branches located outside India, as consideration towards the service rendered by the branches to them, such payments made are consideration towards the services provided by the branches to the appellants.
HELD
The Tribunal noted that the amounts incurred by the head office towards the salaries etc., of the employees working in their branches could by no stretch of imagination be equated to any service rendered to them by the respective branches. The legal fiction created in the proviso to section 66A for consideration of branch as a separate establishment is certainly not for the purposes of demanding service tax on the services alleged to have been rendered by the branch to the head office. In fact, the payments made by the appellants are none other than the recurring expenses like salary, travelling allowance, rent, telephone charge etc. It is not brought on record if any other payment for any other service alleged as provided was made. Thus, the demand on account of reimbursement of expenses to the employees working in the overseas branches does not constitute any remuneration in lieu of a service received by the appellants. The demand is therefore set aside.
17 Circor Flow Technologies India (P.) Ltd. vs. Principal Commissioner of GST & Central Excise [2021 133 taxmann.com 327 (CESTAT – Chen)] Date of order: 16th December, 2021
The assessee is entitled to refund in respect of CENVAT credit of service tax paid under the RCM in the GST period under section 142(3) of the CGST Act if the said CENVAT credit was otherwise eligible under the erstwhile law
FACTS
The appellant paid service tax under reverse charge mechanism on the import of software made during the pre-GST period belatedly in March 2019. In terms of CENVAT Credit Rules, 2004, as it stood during the relevant period, the appellants were eligible to avail credit of the service tax paid by them.
HELD
Hon’ble Tribunal noted that the Adjudicating Authority had rejected the refund holding that the service tax has been paid voluntarily and also that no credit is available in the GST regime. Hon’ble Tribunal held that as per section 174(2) of the CGST Act, as amended Act shall not affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts. As the liability, if any, under the erstwhile law of Finance Act, 1994 to pay service tax would continue even after the introduction of GST, conversely, the right accrued under the said Act in the nature of credit available under CCR 2004 also is protected. It also observed that in this case, there is no allegation that the credit is not eligible to the appellant in the service tax regime and accordingly held that such credit has to be processed under section 142 (3) of GST Act, 2017 and refunded in cash to the assessee.
Note: The Hon’ble New Delhi Tribunal in a similar matter, in the case of Jagannath Polymers (P.) Ltd. vs. Commissioner, Central Goods and Services Tax, Jaipur 1 [2021] 133 taxmann.com 328 (New Delhi – CESTAT) [15-12-2021] also held that merely because the appellant has deposited the service tax payable under RCM in the GST period only after being pointed out by the audit, they shall not be denied refund thereof as the CENVAT credit was available under the service tax regime.
18 MIRC Electronics Limited vs. Commissioner of CSGT, Thane [2021 (55) GSTL (301) (Tri – Mum)] Date of order: 19th July, 2021
Penalty under the provisions of section 11AC of Central Excise Act, 1944 cannot be invoked merely on the basis that irregularities were observed by the audit wing where the appellant has maintained statutory records reflecting particulars of CENVAT credit
FACTS
The appellant was engaged in the business of manufacture of colour television sets, washing machines, etc. The appellant was availing CENVAT credit of excise duty paid on input and service tax paid on input service. During the course of audit by the department, it was observed that CENVAT credit was availed in respect of Rent-a-Cab Service, Insurance, Membership Fees, Foreign Travel expenses. The department denied the CENVAT credit on the ground that the above services are not confirming to the definition of input service under Rule 2(l) of CENVAT Credit Rules. The Adjudicating Authority raised a demand of Rs.9,80,675 with interest and imposed penalty under section 78. This was confirmed by Commissioner Appeals. Hence this appeal.
HELD
Since the appellant failed to produce proper documentary evidence and substantiate its claim with respect to CENVAT credit Rent-a-Cab Service and foreign travel expenses, the respondent was justified in denying the CENVAT credit pertaining to such services. Further, penalty under section 11AC of the Central Excise Act cannot be levied because there was no concealment on the part of appellant as the particulars of CENVAT credit have been recorded in statutory records and books of account.
19 Chryso India Private Limited vs. Commissioner of GST & Central Excise, Alwar [2021 (55) GSTL 159 (Tri- Del)] Date of order: 10th August, 2021
Service tax paid twice on ocean freight is liable to be refunded
FACTS
The appellant had imported raw material and discharged customs duty along with CVD on CIF basis. During the course of audit, it was pointed out that service tax is payable on reverse charge basis on ocean freight for the period prior to 30th June, 2017. In response to the audit objection, appellant deposited service tax along with interest. On being advised that appellant had already paid customs duty and CVD on the import price which includes freight element therefore, the appellant was not required to pay service tax again on freight (under reverse charge basis). Accordingly, appellant filed refund application of the amount of service tax paid on reverse charge basis. However, the refund application was rejected.
HELD
Tribunal held that since the transaction value for Customs Duty and CVD included ocean freight element, therefore, appellant had suffered the double taxation, by again paying the service tax on ocean freight on reverse charge basis. Thus, appellant was allowed refund of such service tax along with interest.
20 Astra Zeneca India Pvt Ltd. vs. Commissioner of GST & Central Excise, Chennai 2021 (55) GSTL 39 (Tri – Chen) Date of order: 23rd June, 2021
Refund of CENVAT credit cannot be rejected merely because such refund claim is clubbed with the CENVAT credit of previous quarter
FACTS
The appellant had filed a refund claim by clubbing the unutilized CENVAT credit of two quarters, namely July to September, 2016 and October to December, 2016. The primary reason for combining the credit for two quarters was that there was no Foreign Inward Remittance Certificate (FIRC) during the earlier quarter, i.e. July to September 2016. The Adjudicating Authority granted a partial refund and rejected the amount of Rs.12,00,695 pertaining to CENVAT credit of the quarter July to September, 2016 by stating that the definition of export turnover under Rule 5(1)(D) of CENVAT Credit Rules, 2004 was not satisfied. Similarly, Commissioner Appeals also rejected the refund claim, and hence the appellant, aggrieved by the Commissioner Appeals’ order filed the appeal before the Chennai Tribunal.
HELD
The Learned Bench relied upon the orders of M/s. B.A. Continuum India Pvt Ltd vs. Commissioner of Service Tax-II, Mumbai 2018 (6) TMI 1011-CESTAT-Mum, M/s. WNS Global Services Pvt. Ltd. vs. C.C.E., Pune III-2015 (11) TMI 905-CESTAT-Mum, and held that for the purpose of refund, the CENVAT credit of any particular quarter can include the amount of brought forward credit from the earlier quarter; the only bar is that refund application must be filed within one year. The refund cannot be rejected merely on the ground that CENVAT credit pertaining to the period prior to October, 2016 was taken while arriving at the total CENVAT credit taken during the quarter October to December, 2016. The Tribunal concluded that the rejection of the refund claim was unjustified and set aside the order of Commissioner Appeals.
