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KLA Tencor Software India Private Ltd. Versus Commissioner of Service Tax, Chennai-III

2016 (6) TMI 447 - CESTAT CHENNAI

Eligibility for refund - Rule 5 of the CCR - unutilized credit availed prior to obtaining registration - software and application engineering and support service - export of service - Held that:- by following the judgment of Karnataka High Court in the case of mPortal India Wireless Solutions Pvt. Ltd. Vs ST [2011 (9) TMI 450 - KARNATAKA HIGH COURT] and decision of Principal Bench of the Tribunal at Delhi in the case of Dorling Kindersley (I) Pvt. Ltd. Vs CCE & ST Noida [2015 (6) TMI 748 - CESTA .....

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output services is in order in view of the fact that period of dispute is prior to 1.4.2011 and also in view of the fact that the phrase activities relating to business would cover all the activities for which credit has been denied and in view of various rulings of the High Court and the Tribunal on the eligibility of service. - Period of limitation - Eligibility of refund claim - time-barred for a portion of the claim for refund - Held that:- the matter is remanded to the first appellate .....

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order and hence they are taken up together for disposal. 2. M/s. KLA Tencor Software India Private Ltd., the appellant herein, are providing software and application engineering and support service to M/s.KLA Tencor Worldwide The appellant is registered with the service tax department from 16.6.2008 and has obtained registration under service tax for the taxable service categories of Consulting Engineering Service, Information Technology Software Service, Maintenance or Repair Service, Busines .....

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Refund claimed (Rs. Refund rejected (Rs.) 1. April 2008 to June 2008 29th April 2009 16,86,324/- 16,86,324/- 2. July 2008 to September 2008 6th October 2009 10,61,530/- 3,88,862/- 3. October 2008 to March 2009 29th April 2009 25,03,480/- 6,50,342/- 4. April 2009 to September 2009 27th July 2010 18,16,941/- 4,10,619/- 5. October 2009 to March 2010 4th June 2010 15,85,596/- 1,68,113/- 6. April 2010 to September 2010 29th March 2011 18,30,480/- 70,439/- 1,04,84,351 33,74,699/- One of the above six .....

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appeals have been filed. 3. Heard both sides in the matter. 4. Appellant was represented by Ms. Thenmozhi Sivakumar, Advocate who submitted that there are three issues involved in these appeals as under :- (a) Eligibility of unutilized credit availed prior to obtaining registration with Service Tax department (b) Nexus between the input service availed by appellant vis-a-vis the output service rendered by appellant and eligibility of CENVAT credit. (c) Refund has been partially hit by limitation .....

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r themselves for payment of tax. Appellant is entitled to avail credit even prior to obtaining registration as the CCR 2004 do not stipulate registration as a pre-condition for availing CENVAT credit. She drew my attention to Rule 3 of CCR 2004 to state that provider of taxable service shall be allowed to take CENVAT credit and it does not explicitly prescribe that only a registered service provider shall take CENVAT credit. She relied on the Hon ble Karnataka High Court judgement in the case of .....

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service, Professional service, Insurance service, Visa transaction fees, Rent-a-cab service, freight charges and claimed refund of tax paid on these services under Rule 5 of CCR 2004; that the denial of refund on the ground that the input services availed do not form part of the definition of input service under Rule 2 (l) is not correct. She submits that above services are alleged to be ineligible on a standalone basis. (a) Maintenance and Repair Service appellant being a software service pro .....

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onsultant and other consultancy services in relation to the statutory compliances which are in relation to their business. The said services assist their organization in solving issues arising in the normal course of their business. (c) Courier Service : Appellant is required to avail this service to deliver and receive documents in a timely manner. Such correspondences are towards the business of the entity and not for personal purpose of employees. Reliance was placed on Tribunals ruling in V .....

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Rent-a-cab services for picking up and dropping off its employees from office premises to their residence. Employees are primary assets of the business and they have to ensure safety and security of their personnel thereby ensuring employees productivity. She relied on Boards Circular No.120/01/2010-ST, F.No.354/268/2009-TRU dt. 19.1.2010 wherein it has been clarified that services like Rent-a-cab, Outdoor catering, Manpower recruitment agency etc. are allowable services as they are relatable .....

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.M.Shriram Consolidated Ltd. 2006 (4) STR 610, wherein it was held that all or any of the services which are defined under the Act and on which service tax is required to be paid is covered under the definition of input service, the appellant can avail the cedit of tax paid on such service. (3) Convergys India Services Pvt. Ltd. Vs CST New Delhi 2012 (25) STR 251 (Tri.-Del.) wherein it is held that there cannot be two different yardsticks, one for permitting credit and the other for eligibilit .....

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od. There has been Tribunals rulings that, date when the payments for the said export of services provided during the relevant quarter are realized, is the relevant date for the purpose of limitation under Section 11B. The relevant date of export of service is the date of receipt of foreign exchange. She relied on (i) Bechtel India Pvt. Ltd. Vs. CCE Delhi AIR-2013 126 CESTAT (ii) Hyundai Motor India Engg. Pvt. Ltd. Vs CCE Hyderabad - TS-207-Tribunal-2014-ST. (iii) Taco Faurecia Design Centre Pr .....

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r refund under Rule 5 of the CCR ? (ii) Whether or not the input service credit availed on service tax paid is in relation to output service and eligible for refund ? and (iii) Whether or not the Appellant is eligible for refund which was partially hit by the limitation of time for the period from 01.04.2009 to 03.06.2009 which was not considered for sanctioning of Refund? 7. With regard to issue (i), the contention of the appellant is that under Section 69 of the Finance Act, 1994 read with Rul .....

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) STR 134. The Hon ble High Court at para-7 of its order has held as follows :- "7. Insofar as requirement of registration with the department as a condition precedent for claiming Cenvat credit is concerned, learned counsel appearing for both parties were unable to point out any provision in the Cenvat Credit Rules which impose such restriction. In the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee i .....

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CCE & ST, Noida (supra) which is also on the aspect of denial of refund claim on the ground of non-registration and the same was held to be unsustainable. Following these judicial precedents, the first issue is answered in favour of the appellant holding that even though they were not registered prior to 16.6.2008, they are eligible for refund of the unutilized credit which was accumulated prior to registration. 8. With regard to issue No.(ii), the learned Commissioner (Appeals) at para-8 o .....

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vant state that the period of dispute in all these cases are prior to 2011. It is only w.e.f. 1.4.2011 that most of the categories of service were held to be ineligible for credit. I find that these services were used by the provider of output service and the Commissioner (Appeals) has not taken into account the inclusive part of the definition even though same has been extracted in his order. The most vital aspect is that the phrase activities relating to business covers every activity for whic .....

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decision in the case of Maruti Suzuki Ltd. is no longer good law in view of Hon ble Supreme Court s decision in the case of Ramala Sahkari Chini Mills Ltd. Vs CCE Meerut-I - 2016-TIOL-20-SC-CX-LB. The Tribunal s ruling in Sundaram Brake Linings & Others Vs CCE stands overruled by the Honble Madras High Court in their own case reported in 2016 (41) STR 168 (Mad.) The ratio laid down by Tribunal s LB in the case of Vandana Global would have no application to the facts of the present case as t .....

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, in the present case, the situation is not covered under the situation categorized under Section 11B as this is a case pertaining to claim of refund on the unutilized credit of input service resulting from non-payment of duty on exports. The definition of relevant date also does not cover refund of unutilized credit. Therefore, the notification issued under Rule 5 of CCR, in my view, cannot go beyond the primary Section which is Section 11B. It was also submitted by appellant that there was a .....

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