2026-VIL-518-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – 100% EOU, Refund of unutilised Cenvat credit - Appellant claimed refund of unutilized Cenvat credit on various input services used for providing output services. The refund claims were partially rejected by the Adjudicating Authority - Whether the denial of refund of Cenvat credit relating to various input services received by the appellant was correct – HELD - The definition of 'input services' during the relevant period had a wide ambit and included "activities relating to business". The lower authorities had not provided any reasoning for treating these services as ineligible input services, despite the nature of the appellant's business as a 100% export-oriented BPO/Call Centre. The dichotomous findings of the lower authorities on the non-submission of invoices are unsustainable, especially when the appellant had submitted a Chartered Accountant's certificate in support of its refund claim – The appellant is eligible for refund on input services such as rent-a-cab, insurance, and architectural services – the impugned Orders-in-Appeal, to the extent it disallow the refund claim are unsustainable and set aside. The matter is remanded to the jurisdictional Original Authority only for the limited purpose of redetermining the quantum of refund to which the appellant is entitled and to sanction the same along with interest as entitled in law – The appeal is allowed - Whether the Appellate Authority erred in holding that the formula adopted by the refund sanctioning authority was correct – HELD – There is no merits in the plea of the appellant that the refund Notification No.5/2006-CE (NT) dated 14-03-2006 does not deny refund of input services relating to exports done by an SEZ unit and that therefore the service exported from SEZ unit should be included in the ‘total turnover’ as well as 'export turnover’ of the formula prescribed in the Refund Notification - On the other hand, concur with the alternate plea of the Appellant, that the Notification No.5/2006-CE (NT) dated 14-03-2006 specifically provides that the refund of Cenvat credit is to be determined based on the ratio of export turnover to the total turnover of the registered premises from which the output services are exported. Since the appellant maintains separate accounts for its STPI and SEZ units, the total turnover and export turnover for the purpose of the formula should be confined to the STPI unit's turnover, without including the SEZ unit's turnover.
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