2025-VIL-2081-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Eligibility for refund of service tax, CENVAT credit on input services, admissibility of Swachh Bharat Cess credit, export turnover calculation – Rejection of refund on the grounds that the input services had no nexus with the output services, the Swachh Bharat Cess (SBC) paid on input service invoices issued prior to 03.02.2016 was not admissible, some export invoices were of prior period though realized during the period in question, and there was an error in calculation as the turnover excluded only from export turnover and not from total turnover - Whether the input services used by the appellant have a nexus with the output services provided, thereby making the appellant eligible for CENVAT credit and refund – HELD - The eligibility of a particular service for refund under Rule 5 of the CENVAT Credit Rules is inextricably linked to the eligibility of such service under Rule 2(l) of the CENVAT Credit Rules. Therefore, even if the credit on a particular service is held to be not eligible for refund, the revenue has to take recourse to Rule 14 of the CENVAT Credit Rules to recover the wrongly availed credit. The Revenue is not permitted to decide the nexus of the input service to the output service while deciding a refund claimed under Rule 5 – Further, the Commissioner (Appeals) and the original authority have not discussed the nexus of the services from the angle of whether the services were used primarily for personal use or consumption of any employee, as required under the amended definition of "input services" w.e.f. 01.04.2011. Therefore, the matter is remanded on this issue to the original authority to allow the credit if the appellant can establish with evidence that the disputed services are not used primarily for personal use or consumption of any employee – The appeal is allowed by remand - Whether the appellant is eligible for refund of Swachh Bharat Cess (SBC) paid on input service invoices issued prior to 03.02.2016 – HELD - The Appellant is eligible for refund of SBC paid on input service invoices issued prior to 03.02.2016. The Tribunal relied on the decision in the case of WNS Global Services, wherein it was held that when it comes to substantial benefit, in the absence of a specific embargo in the rules, the benefit should not be denied to the assessee - Whether the appellant is eligible for refund of service tax paid on input services used in export of services, where the export proceeds were realized after 21 months from the date of invoice – HELD - As per Rule 6A of the Service Tax Rules, export is complete only upon receipt of foreign exchange, and the rule does not prescribe any time period for receiving the consideration against the exported service. Once the consideration is received, the service qualifies as export, and the appellant becomes entitled to the refund as claimed - Whether the reduction of export turnover without corresponding reduction in the total turnover for the purpose of refund calculation is correct – HELD - The appellant has rightly adopted the formula prescribed under Rule 5 of the CENVAT Credit Rules, even though the refund is claimed under Notification 39/2016-ST, as the notification does not prescribe any formula. The reduction of export turnover without commensurate reduction in the total turnover is not tenable in law.
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