[2016] 68 taxmann.com 41 (Mumbai - CESTAT) CESTAT, MUMBAI BENCH. Commissioner of Service Tax. Vs. Lionbridge Technologies (P.) Ltd.

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1 [2016] 68 taxmann.com 41 (Mumbai - CESTAT) CESTAT, MUMBAI BENCH Commissioner of Service Tax Vs. Lionbridge Technologies (P.) Ltd.* M.V. RAVINDRAN, JUDICIAL MEMBER ORDER NO. A/85873/16/SMB AND OTHERS FEBRUARY 4, 2016 Rule 3, read with rules 2(l) and 5, of the Cenvat Credit Rules, Cenvat Credit - General - Assessee exported information technology services - Assessee took credit of services received at Chennai Branch and sought refund thereof under rule 5 - Department denied refund on ground that assessee's Chennai Branch was not registered and credit cannot be allowed without registration - HELD : Assessee had exported Information Technology Services and input services were used for rendering such services - Assessee's Chennai branch was subsequently registered - Substantial benefit of Cenvat Credit cannot be denied merely because of non-registration - Hence, credit and consequent refund was allowed [Paras 6.1 and 6.2] [In favour of assessee] Rule 2(l), read with rule 5, of the Cenvat Credit Rules, Cenvat Credit - Input service - General - Assessee exported information technology services - Assessee took credit of rent-a-cab service, interior design service, rentals paid for office premises, professional fees paid to chartered accountant, purchase of foreign currency for staff travelling abroad, etc. and claimed refund thereof - Department denied refund on ground that said services do not qualify as 'input services' as these services do not play any role in providing 'output services' - HELD : All services were used 'for' purposes of providing output service being information technology services - Credit validly taken cannot be denied at time of utilization/refund; hence, without questioning taking of credit, department cannot question grant of refund - Accordingly, refund was allowed [Para 6.3] [In favour of assessee] 1

2 CASE REVIEW CST v. J.P. Morgan Services India (P.) Ltd. [2015] 60 taxmann.com 119 (Mum.) (paras 6.2, 6.3 & 7) relied on. CASES REFERRED TO CST v. J.P. Morgan Services India (P.) Ltd. [2015] 60 taxmann.com 119 (Mum.) (para 5) and Morgan Stanley Advantage Services Ltd. v. CST [Final Order Nos A/ /2014-WZBK-1 (CSTB), dated ] (para 5). B. Kumar Iyer, Suptd. (AR) for the Appellant. Kewal Shah, CA for the Respondent. ORDER 1. This appeal is filed by Revenue against Order-in-Appeal No. 98 dated Heard both sides and perused the records. 3. The issue involved in this case is regarding the refund claim filed by the respondent in respect of service tax credit on the input services used for providing output services i.e. Information Technology Services. The respondent had availed CENVAT credit and sought refund of the service tax paid on the services which were used for providing output services. The adjudicating authority has, against the refund claim of approximately out of Rs.21.4 lakhs, sanctioned a refund of Rs.6.95 lakhs. Aggrieved by such an order, the respondent preferred an appeal before the first appellate authority who sanctioned a further refund of Rs.3 lakhs and 5.97 lakhs respectively. The respondent has not filed any appeal against the balance amount of refund claim which was rejected by the adjudicating authority. The first appellate authority's order is being contested by Revenue before this Tribunal on various grounds. 2

3 4. Learned D.R. appearing for the Revenue would bring to my notice that as regards the refund claim of Rs.3,00,000/-, the said amount of service tax paid is in respect of services which were rendered to the respondent's Chennai branch before the registration and the registration was granted to them subsequently. It is the submission of the learned D.R. that unless there is a registration, the respondent could not have co-related the use of CENVAT credit in respect of the said output services. It is his further submission that the provisions of Section 65 of the Finance Act, 1994 stipulate the procedure for registration in a prescribed form and unless it is granted, CENVAT credit could not be availed. As regards the refund of CENVAT credit of an amount of Rs.5.97 lakhs it is his submission that the said credit is in respect of rent-a-cab service, interior design service, rentals paid for the office premises, professional fees paid to C.A., purchase of foreign currency for the staff travelling abroad. It is his submission that these services do not qualify as 'input services' as these services do not play any role in providing 'output services'. 5. Learned C.A. appearing on behalf of the respondent would submit that the issue involved in this case is no more res integra as this Tribunal in the case of CST v. J.P. Morgan Services India (P.) Ltd. [2015] 60 taxmann.com 119 (Mum.) has held that registration is not pre-requisite for availment of CENVAT credit which is subsequently sought as refund. He would also submit that this Bench in the case of Morgan Stanley Advantage Services Ltd. v. CST [Final Order Nos A/ /2014-WZBK-1 (CSTB), dated ] has held that various services like travel agent service, consultancy service etc., are used for rendering of output service, hence the refund needs to be sanctioned. 6. After considering the submissions made by both sides, I find that Revenue's appeal is devoid of merits for more than one reason. 6.1 Firstly, there is no dispute as to the fact that the respondent is providing 'output services' i.e. Information Technology Services and the said services are exported. It is also undisputed that the input services are used for rendering such services. 6.2 Secondly, I find strong force in the contentions raised by the learned C.A. as regard the CENVAT credit approximately of Rs.3 lakhs, the only reason which is advanced by the Revenue is that the Chennai branch of the respondent was not registered with the department. It is undisputed that the said branch was subsequently registered. I find that the Division Bench of this Tribunal in the case of JP Morgan Services India (P.) Ltd. (supra) on an appeal filed by Revenue in para 7 held as under: "7. The judgments cited by Commissioner (Appeals) are relied upon. Further, judgment of the Karnataka High Court in the case of Mportal India Wireless Solutions (P.) Ltd. v. C.S.T (27) S.T.R. 134 which held that there is no restriction in availing Cenvat credit before registration is granted.on the second issue of late registration, the respondents have rightly relied on Rule 4 of 3

4 the Service Tax Rules under which registration is deemed to be granted within seven days of the application for registration. In the present case, the respondent had applied for centralized registration on Some communication took place thereafter between the respondent and the department, which has been shown by the respondent and the registration was finally granted on We find nothing substantial in the series of communications to indicate that some important elements to be considered for registration are missing in the application, such as the premises which is sought to be registered. The Hon'ble High Court held that '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 is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law. Therefore, said finding recorded by the Tribunal as well as by the lower authorities cannot be sustained. Accordingly, it is set aside". The above said views are binding on me, accordingly I find that there is no merits in the appeals filed by Revenue. 6.3 Thirdly, as regards the refund of an amount of service tax paid on various services (as herein above mentioned in para 4) I find that the Division Bench of this Tribunal in the case of Morgan Stanley Advantage Services (supra) has held as under: "6. As regards the appeals of the Revenue, the only ground urged is on the use of the expression 'in' which has been retrospectively amended by substitution of expression 'for'. The expression 'for' implies 'for the purposes of' as held by the Hon'ble Apex Court in the case of Indian Chamber of Commerce [AIR 1976 SC 348]. Therefore, if any input service has been used for the purpose of export of output service, refund of input service credit would be available. In any case, the department has not objected to the assessee-respondent taking the credit at the relevant time and the objection has been raised only at the time of filing of the refund claims. This Tribunal, in the case of Commissioner of Service Tax, Delhi v. Convergys India (P.) Ltd (16) S.T.R. 198 (Tri.-Del.) had taken the view that there cannot be two yardsticks, one for allowing the input credit and another for refund of the credit taken. The Tribunal observed in the said case that there cannot be two different yardsticks : one for permitting the credit and the other eligibility for granting credit. Whatever credit has been permitted to be taken, the same are permitted to be utilized and it is not possible to have two provisions, one for grant of refund or as rebate. Without questioning the credit taken, the eligibility to refund cannot be questioned. The above ratio squarely applies to the facts of the present case. On this ground also the appeals filed by the Revenue fails and sanction of refund to the assessee-respondent cannot be disputed." 4

5 7. In view of the above, I find that both the issues are squarely covered by the decisions of this Tribunal, accordingly, I find that the impugned order is correct and does not require any interference. The appeal is rejected. vineet *In favour of assessee. 5