Service Tax
TRT-2025-
Cestat Mumbai
Date:-26-08-22
In:-
Issue Favourable to Tax Payer ?:-
Order date – 26 August 2022
Facts –
- The appellant, M/s. BNP Paribas India Solutions Pvt. Ltd., is engaged in providing support services to its group companies located outside India and they also provide services to domestic clients in India.
- Appellant filed refund applications under Rule 5 of the Cenvat Credit Rules read with Notification No. 05/06-CE (NT) dated 14.03.2006 for the period October 2009 to March 2010 and April 2010 to September 2010, which was rejected in part on the grounds that certain credits which have been taken for computation of the refund in terms of Rule 5 of the Cenvat Credit Rules are ineligible credits.
- Further, while calculating cenvat credit availed during the quarter, the Assistant Commissioner has deducted the amount of cenvat credit that could have been utilized towards the payment of service tax on the services provided domestically.
- Aggrieved the appellant filed an appeal.
Issue –
- Whether the rejection of refund claim by the department is sustainable?
Order –
- The Tribunal observed as for the first ground for modification of refund claims that admittedly no proceedings have been initiated against the appellant for denial of such credit in terms of Rule 14 of the Cenvat Credit Rules. In absence of such proceedings, the lower authorities cannot be justified in modifying the refund claims for this reason. The same view was taken in BNP Paribas India Solution Pvt. Ltd. as well.
- The Tribunal relied on Form A appended to Notification No 27/2012 dated 18.06.2012, prescribing the conditions limitations and safeguards in respect of refund claims filed under the Rule 5 and observed that no deduction from the total cenvat credit taken will be made on any other account while computing the Net CENVAT Credit. The formula under Rule 5 determines the maximum eligible refund to the assessee. Whatever taxes are paid utilizing the cenvat credit availed during the period will automatically get deducted because if an assessee has utilized certain portion of the credit, then that amount would not be available as a balance on the close of the month/quarter in which the refund is sought.
- Therefore, while filing the refund claim claimant has to debit the amount claimed by him as refund under Rule 5 from his CENVAT Account. Therefore, the lower authorities have been in error while deducting the amount of the credit that would have been utilized for payment of the taxes/duties in respect of the domestic clearances from the total CENVAT Credit taken while determining the Net CENVAT Credit for application of formula as per Rule 5.
- Therefore, order was set aside and the appeal was allowed.
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