2025-VIL-484-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund, Erroneous refund, Input service, Nexus with output service – Respondent-assessee filed two refund claims for the periods January-March 2007 and April-June 2007. The refund applications were processed and 80% of the refund was sanctioned - Revenue issued notices proposing to demand the refund already sanctioned and deny the balance of the refund on the ground that there was no nexus between the input services and output services, nature of output services was not indicated in the invoices, FIRCs did not contain reference to export invoices, original copies of the FIRCs were not submitted and the services were rendered in India - Whether the Revenue was correct in taking recourse to Section 73 of the Finance Act, 1994 when the provisions of Section 84 did not exist – HELD - The Commissioner of Central Excise had no power to examine the legality or propriety of the orders passed by lower authorities save otherwise than by invoking the provisions of Section 84. Since no such power was exercised and the show cause notices were issued beyond the expiry of two years under Section 84, the action of issuing the show cause notices for recovery of amounts claimed to have been erroneously refunded under Section 73 was not sustainable - Refunds already sanctioned by relying on the judicial legal precedents holding the field then cannot be termed as "erroneous refund" merely because of the change in legal position subsequently - the impugned order is confirmed and Revenue appeal is dismissed - Whether the Department was right in issuing a show cause notice to recover the refund, already granted to the appellants after due verification, terming the same to be "erroneous refund" – HELD - The refunds which have been granted after due verification cannot be termed to be erroneous without the authority of law as the refunds sanctioned were never appealed against and no competent authority has decided that the orders are erroneous. The Tribunal relied on the decisions of the Delhi High Court in BT (India) Private Limited and this Bench in Convergys India Services Pvt. Ltd., which held that the authority while considering an application for grant of refund neither sits in appeal nor is it entitled to review an assessment deemed to have been made, and the correct course of action would be to decide the eligibility of various input services for credit and thereafter in the refund proceeding decide the correctness of the claim - Whether the input services availed by the appellants can be alleged to have no nexus with the output services while issuing a show cause notice for recovery of "erroneously refunded" amount – HELD - The nexus between the input and output services cannot be decided during the course of grant or rejection of refund, for which statutory provisions otherwise exist. The Tribunal relied on its own decision in Convergys India Services Pvt. Ltd., which held that the correct course of action would be to decide the eligibility of various input services for credit and thereafter in the refund proceeding decide the correctness of the claim - Procedural infirmities – Denial of substantial benefit – HELD - Procedural lapses, if any, should not come in the way to extend the substantial benefit available to the respondents. The Tribunal relied on the decisions in Samsung R&D Institute India Bangalore Pvt Ltd and Robert Bosch Engineering and Business Solutions Limited, which held that even if there are procedural lapses, substantial benefit cannot be denied.
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