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07 August 2021

No need to establish one to one correlation between output service exported and input Service for claiming refund of unutilized CENVAT Credit.

In case of General Motors Technical Centre India Pvt. Ltd.  Vs.  Commissioner of Central Tax CESTAT BANGLORE, General Motors Technical Centre India Pvt. Ltd. (the Appellant) is engaged in providing Consulting Engineer Services to their customers located outside India and are availing the CENVAT credit of Service Tax paid on input services which are required for providing the resultant output service as per the provision of CENVAT Credit Rules, 2004.  The Appellant filed a refund claim for INR 4,26,79,323/- for refund of unutilized CENVAT Credit in respect of service tax paid on various input services said to have been used for providing output services exported outside India, during the period October 2015 to December 2015.  After considering the submissions made the Ld. Adjudicating authority while deciding the matter sanctioned the refund claim of INR 4,15,49,358/- and rejected the refund claim of INR 11,29,965/- considering it to ineligible CENVAT Credit on certain services.  Being aggrieved of the same the Appellant preferred an Appeal before the Respondent who upheld the OIO, except allowing CENVAT Credit of INR 34,250/- in respect of Technical Consultancy Services and rejected the remaining amount of refund claim amounting to INR 10,95,715 on the ground of lack of nexus and for certain services copy of invoice is not provided.

Being aggrieved of the aforesaid Order-in-Appeal the Appellant preferred an appeal before the Hon’ble CESTAT, Bangalore.  The Hon’ble Bench after hearing both sides held as under:-

  • That all the services on which the refund has been rejected have been consistently held to be input services in various decisions relied upon by the Appellant and it has been consistently held by the Tribunal in various decisions with a view that after the amendment of Rule 5 of CCR, there is no need for one to one correlation between input services and the output services.
  • Further held that no correlation is required because the intention of the Government is to allow refund to the exporters and the Circular/clarification issued on this subject has to be viewed with the objective of allowing the refund.
  • That the Respondent has not questioned the service tax paid on input services at the time when the CENVAT credit was taken and it has been earlier held that the Respondent is not permitted to question the same at the time of claiming refund.
  • That the Appellant has availed the services of Rent-a-Cab for the purpose of bringing and dropping the employees and this service has been used for providing the output service and the invoices have been produced by the Appellant. Therefore, the Appellant is entitled to refund of CENVAT Credit of INR 10,95,715/-.