Refund of CENVAT credit pertaining to the period prior to registration cannot be denied

The CESTAT, Chennai in Commissioner of Service Tax v. M/s. Ad2pro Global Creative Solutions Pvt. Ltd. [Service Tax Appeal No. 40175 - 40177 of 2017 dated May 26, 2023] has held that, denial of CENVAT credit for non-registration of premises is not justified as per Section 11B of the Central Excise Act, 1944, ("the CE Act"). Further held that, when conditions like payment of tax and receipt of service are satisfied, in such case credit cannot be denied on the basis that the credit was availed few days before the payment of tax.

Facts

M/s. Ad2Pro Global Creative Solutions Pvt. Ltd. (formerly known as M/s. Ad2Pro media Solution Pvt. Ltd.) ("the Respondent") is engaged in providing the Advertising services to their foreign clients.

The Respondent filed refund claims under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-Central Excise (NT) dated June 18, 2012, for the period October 2012 to June 2013. 

The Assistant Commissioner of Service Tax, Service Tax-I, Division-III, Chennai vide Orders-in-Originals namely, 01/2015(R) dated April 09, 2015, 15/2015(R) dated August 13, 2015 and 57/2015(R) dated November 06, 2015 ("the OIOs") rejected refund claims partly on the ground that the Respondent had not submitted the documents within the limitation period of one year as per Section 11B of the CE Act and the Respondent has availed the CENVAT credit on certain invoices before the payment of service tax and due to non-registration of premises.

Aggrieved by the OIOs, the Respondent filed an appeal before the Commissioner of Service Tax, Service Tax-II Commissionerate, who vide Order-in-Appeal 534, 535 & 536/2016 (STA-I) dated September 01, 2016 ("the Impugned OIA") allowed the refund which was rejected by the Assistant Commissioner.

Being aggrieved, the Revenue Department ("the Appellant") filed this appeal, contending that the registration is a prerequisite for availing any substantial benefits like CENVAT Credit and the Respondent has failed to take registration thus, the refund of CENVAT accumulated prior to registration should not be allowed. Further contended that, the Respondent has availed refund of amount of tax paid prior to the period for which the refund claim is filed, thus the Respondent is not entitled to the refund amount.

Issues

1. Whether the Respondent can claim refund of CENVAT credit without registration of its premises
2. Whether the Respondent can avail CENVAT credit before the payment of tax? 

Held

The CESTAT, Chennai in Service Tax Appeal No. 40175 - 40177 of 2017 held as under:

• Referred to the judgments namely, Commissioner of Service Tax-III, Chennai v. CESTAT, Chennai &Scionspire Consulting Services (India) Pvt. Ltd. [2017 (3) G.S.T.L. 45 (Mad.), mPortal India Wireless Solutions Pvt. Ltd. v. C.S.T., Bangalore [2012 (27) S.T.R. 134 (Kar.)] and M/s. Temenos India Pvt. Ltd. v. Commissioner of Service Tax, Chennai [2020 (2) TMI 354 – CESTAT, Chennai] wherein, the courts have held that, in absence of any statutory provision, the registration of premises is not a mandatory condition for availing input tax credit and  thus, the assessee could not be denied refund of unutilized CENVAT credit pertaining to pre-registration period.
• Held that, denial of CENVAT Credit for non-registration of premises is not justified.
• Stated that, in respect of availment of CENVAT credit before the payment of tax, where substantive conditions to take CENVAT Credit are fulfilled and the Respondent had admitted that it was a procedural lapse, in such case Respondent’s substantive right cannot be taken away.
• Further held that, when there is no dispute on eligibility of CENVAT credit of service tax paid and conditions like payment of tax and receipt of service are satisfied, in such case credit cannot be denied on the basis that the credit was availed few days before the payment of tax.