2016 (8) TMI 40 - AT - Service Tax

Refund of un-utilized cenvat credit - 100% EOU - eligible input services - nexus with the output services - export of Information Technology Software Services (ITSS) - Held that - the input service required in one establishment may differ from the input service required in another establishment, even though the output services rendered by both establishments may be similar - the contention of the Revenue that the judgment in Maruti Suzuki case 2009 (8) TMI 14 - SUPREME COURT should be applied and the functional utility of the input and integral nexus has to be established in the case of input service also, is without merits. When time limit of refund claim is one year, there is no requirement that input credit claimed as refund should correspond to months in which exports have taken place. - merely because part of the amount claimed in each refund related to credits on input, which have not been used in the same month, the credit cannot be denied. Further, denial of refund on the ground that these services do not qualify as input services is not justified. Both grounds are answered in favour of the appellant. Claim of refund allowed - Decided in favor of assessee.

Summary

Issues:
Refund claim rejection based on nexus with output services and time-barred invoices.

Analysis:
1. The appellants, engaged in software services, filed refund applications for service tax paid on input services used for export. Discrepancies led to show cause notices, resulting in a partly allowed refund. Commissioner upheld rejection except for rent-a-cab services. Appellants appealed to the Tribunal.

2. The refund claim rejection was based on two grounds: lack of nexus between input and output services and time-barred invoices. The counsel argued against the rejection, citing the necessity and integration of each input service for the output services provided by the appellants.

3. The Revenue relied on Maruthi Suzuki Ltd. case to contest the nexus between input and output services. The Tribunal analyzed the definition of input services pre-2011, emphasizing the broader scope that included services related to the business of manufacture. The Tribunal noted that the Revenue's contention lacked merit as the essentiality of input services for providing output services cannot be decided without proper material.

4. Regarding time-barred invoices, the Tribunal referred to circulars and judgments emphasizing that the one-year time limit for refund claims does not require input credit to correspond to the months of export. Denying refund on this ground was deemed unjustified.

5. Detailed analysis of each input service showed their necessity for the appellants' business of exporting services. The Tribunal referenced various judgments supporting the qualification of these services as input services eligible for credit and refund.

6. Ultimately, the Tribunal set aside the refund denial, allowing the appeal with consequential reliefs. The judgment highlighted the importance of establishing the nexus between input and output services and clarified the time limits for refund claims.