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2021 (6) TMI 673 - CESTAT AHMEDABADRefund of service tax paid by utilizing the Cenvat credit denied - denial on the ground that the output service was exempt under section 102 of Finance Act, 1994 - refund of interest - HELD THAT:- The learned Commissioner (Appeals) held that reversal of Cenvat credit under Rule 6 of Cenvat Credit Rules, 2004 would not arise. Despite this clear finding the learned commissioner (Appeals) denied the refund on the ground that it will lead to double benefit once through availment of Cenvat credit and another through refund of service tax which is not permissible at all. With the above finding it is settled that Rule 6 shall not apply in the present case. The revenue also not challenged this finding therefore, it attains the finality. Now the issue remains to be decided that when the output services has been exempted retrospectively with a rider that whatever duty was paid to be refunded to the assessee, whether the service tax paid through utilization of Cenvat credit should be refunded or otherwise. During the relevant period i.e. 01.04.2015 to 29.02.2016 the output services were very much taxable - The appellant was legally entitled for the Cenvat Credit on the input service received from the sub- contractors and used in providing the output service. As per the plain reading of section 102 legislature knowing well that service tax on the construction service obviously paid not only on cash but also by utilizing the Cenvat credit on input service. With this clear understanding provision of refund of service tax paid on output service was also provided in section 102. There is no provision to given a different treatment of service tax paid on output service that whether the entire service tax was paid from cash or partly paid from cash and partly from Cenvat credit. Therefore, in whatever manner the service tax paid irrespective partly from cash and partly from Cenvat credit, total tax paid by the assessee was mandated to be refunded to the service provider. Also, the provision of Rule 11 of the Cenvat Credit Rules, 2004, is applicable only in the case where the assessee has taken the Cenvat Credit on Input Service and the said credit is lying unutilized and the output service became exempted - In the present case while taking the Cenvat credit the output service were not exempted and the Cenvat credit was utilized for the payment of service tax therefore, neither any Cenvat credit was lying accumulated nor the service at the relevant time was provided under exemption particularly issued under section 93 of the Finance Act, 1994. In the present case during the relevant period the services were very much taxable therefore, the availment of Cenvat credit and utilization thereof and also payment of service tax on the output service was correct. Hence, the of sub- rule (4) of Rule 11 of the Cenvat Credit Rules is not at all applicable in the facts of the present case. Thus, in the present case there is no dispute in availment of Cenvat credit at the time of receipt of input service. Therefore, subsequent exemption by virtue of section 102 of Finance Act, 1994 will not make disentitle the appellant from the said Cenvat credit. Refund of interest - HELD THAT:- The said interest was paid on the service tax which is refundable under Section 102. When there is no levy of service tax the government cannot retain the interest paid on such non levy therefore, even though it is not specifically provided under Section 102. The interest paid on the service tax which is to be refundable is nothing but a piggy back of refundable service tax. Hence, the same is eligible for the refund to the appellant. The appellant is entitled for the refund of service tax paid through Cenvat credit and also the interest paid for delay in payment of service tax - appeal allowed - decided in favor of appellant.
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