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2015 (2) TMI 312 - AT - Service TaxDenial of refund claim - export of software service and software consultancy service - the activity were not taxable during the relevant period - Unutilized CENVAT Credit - discrepancies were noticed - invocation of Rule 6(3)(c) of the Cenvat Credit Rules, 2004 - Held that:- Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 has been issued. Rule 6 of Cenvat Credit Rules, 2004 deals with obligation of the manufacturer of dutiable and exempted goods and provider of taxable and exempted services. Under Rule 6(3)(c), the provider of output service shall utilise credit only to the extent of an amount not exceeding 20% of the amount of service tax payable on taxable output service. In the present case, the services provided by the appellant and exported is not a taxable output service inasmuch as software development software service and software consultancy service become taxable only in the Budget 2008. Therefore, the cap of 20% prescribed under Rule 6(3)(c) have no application whatsoever. Therefore, there was no bar on the appellant in availing full credit in respect of IT software services during the material period. Object of EXIM Policy of the Government of India is to promote exports of goods and services and not export of taxes. Service Tax being a destination based consumption tax, in the case of exports there should not be any tax burden and the tax burden, if any, is to be imposed by the Government of the country where the services are consumed. Otherwise, it would render the exports of software uncompetitive. Keeping in view of above policy objective of the government, it is appropriate to hold that the appellants are eligible for the refund of the amount claimed by them of ₹ 2,14,45,060/- during the impugned period on account of export of exempted services subject to the satisfaction of other conditions prescribed in Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006 and the Revenue shall verify the same. - Following decision of mPortal India Wireless Solutions (P.) Ltd. Versus Commissioner of Service Tax [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and assessee's own previous case [2013 (7) TMI 124 - CESTAT MUMBAI] - Impugned order is set aside - Decided in favour of assessee.
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