Cenvat Credit Available On Books Of Account Cannot Be Rejected Without Following Due Procedure: CESTAT

The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that unless CENVAT Credit availed by the appellant has not been recovered by way of the issue of a show cause notice invoking Rule 14 of the CENVAT Credit Rules, 2004, CENVAT Credit available on the books of account cannot be rejected when it is accumulated on account of export of service.

The two-member bench led by Anil G. Shakkarwar (a technical member) has set aside the order rejecting the refund of CENVAT credit and directed the original authority to allow the refund.

The appellant/assessee is in the business of exporting services, and they availed themselves of CENVAT credit for service tax paid on the input services. The appellant filed two separate refund applications for refund of unutilized accumulated CENVAT credit under the provisions of Notification No. 27/2012-CE dated June 18, 2012, issued under Rule 5 of the CENVAT Credit Rules, 2004.

Certain amounts were allowed, and certain amounts were rejected. Against the refunds rejected, appellants preferred two separate appeals before the Commissioner (Appeals).

The Commissioner (Appeals) allowed relief but also did not allow a refund of Rs. 5,97,465 out of one claim and did not allow a refund of Rs. 6,17,759 in respect of the A claim. Therefore, the appellant has preferred two appeals in respect of the rejected portion of the two refund claims before the Tribunal.

The appellant submitted that out of the amounts reflected in two appeals, one is CENVAT credit for service tax paid on event management services, and the other is service tax paid on rentals of immovable property. They were issued a deficiency memo, but there was no issue of a show-cause notice for the rejection of a refund. The reason for rejection was that the premises in respect of which the rent was paid were not included in the service tax registration by the appellant.

The Tribunal noted that amounts of CENVAT credit were not disallowed by way of invoking Rule 14 of the CENVAT Credit Rules, 2004; therefore, the amounts were available in the appellant's account. Since the CENVAT credit is available on the accounts of the appellant, the refund could not be rejected.

Case Title: M/s Saavn Media Private Limited Versus Commissioner of Central Goods & Service Tax-Mumbai East

Citation: Service Tax Appeal No. 86560 of 2019

Date: 16.03.2023

Counsel For Appellant: Abhishek Deodhar

Counsel For Respondent: Prabhakar Sharma

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