CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD
Facts of the case in brief are that the appellant is a 100% Export Oriented Unit (EOU) engaged in providing network management and other services to their clients. They also avail the benefit of CENVAT Credit as per Cenvat Credit Rules, 2004 (CCR, 2004) in respect of the inputs/input services used by them. During the course of business, they imported ‘Netcool suite’ from M/s Softential Inc, USA which they used in the services which they exported.
[Order per: P.V. SUBBA RAO]
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. – I
Service Tax Appeal No. 21159 of 2014
(Arising out of Order-in-Appeal No.218/2013 (H-IV) S.Tax, dated 24.12.2013 passed by
Commissioner of Customs, Central Excise & Service Tax (Appeals-II), Hyderabad)
M/s Sentini Technologies Pvt Ltd., Plot No. 1229, Block A,Road No. 60, Jubilee Hills,Hyderabad – 500 034.
Commissioner of Central Excise & Service Tax (Appeals-II) 7th Floor, Kendriya Shulk Bhavan,L.B. Stadium Road,Basheerbagh, Hyderabad,Telangana – 500 004.
Shri G. Prahlad, Advocate for the Appellant.
Shri C. Mallikarjun Reddy, Superintendent for the Respondent.
Coram: HON'BLE Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL)
HON’BLE Mr. P. DINESHA, MEMBER (JUDICIAL)
FINAL ORDER No. A/30967/2020
Date of Hearing:14.10.2020
Date of Decision:04.11.2020
[Order per: P.V. SUBBA RAO]
This appeal is filed against Order-in-Appeal No. 218/2013 (H-IV) S.Tax dated 24.12.2013.
2. Facts of the case in brief are that the appellant is a 100% Export Oriented Unit (EOU) engaged in providing network management and other services to their clients. They also avail the benefit of CENVAT Credit as per Cenvat Credit Rules, 2004 (CCR, 2004) in respect of the inputs/input services used by them. During the course of business, they imported ‘Netcool suite’ from M/s Softential Inc, USA which they used in the services which they exported. This imported software being in the nature of a service covered under Section 66A of the Finance Act, 1994 the appellant paid the service tax amounting to Rs.1,61,47,454/- on 22.02.2010. Service tax is levied on the service provider of taxable service as per Section 66 of the Finance Act, 1994. However, in respect of some services covered under Section 66A, where the service is imported, the service recipient is liable to pay service tax as if he was the one who provided the service. If the service on which the service recipient paid service tax is their input service, they can take CENVAT credit of the same. CENVAT credit can be used to pay service tax on their output services. It can also be refunded to them if the output service is exported (Rule 5 of Cenvat Credit Rules, 2004). In this case, the appellant took CENVAT credit of the service tax paid by them under Section 66A on the Netcool Suite imported by them. Thereafter, on 14.05.2010, they filed a refund claim for the Cenvat credit for period January to March, 2010 under rule 5 of Cenvat Credit Rules, 2004 read with Notification No. 5/2006-CE-NT dated 14.03.2006. A show cause notice was issued to them on 09.08.2010 seeking to deny the refund on the grounds that (a) both the input service and output service fall under the information technology services and (b) that the amounts credited as per Foreign Inward Remittance Certificates (FIRC) are prior to the date of export invoices. It was therefore alleged that proper proof of export was not provided and there was no clarification as to whether the software is an input service for the services exported by them. After following due process, the original authority, by his order dated 27.11.2011, rejected the refund claim. On appeal, by his order dated 20.07.2011, the First Appellate Authority remanded the matter back to the original authority for denovo adjudication. The denovo order–in-original was passed on 30.09.2013 rejecting the refund on the following grounds:
a) It is to be established that the Appellant have imported Information Technology Software Service from their client abroad.
b) In the absence of any documentary evidence or End-User License Agreement between the parties which provides the transfer of right to use the information technology software service electronically, it cannot be categorically stated that the Appellant have imported “Information Technology Software Services”.
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