CESTAT Chennai ruled out that refund of tax cannot be denied on account of procedural lapse

Fact and Issue of the case

Brief facts are that the appellants are engaged in providing Information Technology Services and are also exporting these services. They availed credit on the service tax paid by them and applied for refund under Rule 5 of Cenvat Credit Rules, 2004 as amended till date. The refund claim was for the period July, 2013 to September, 2013. The original authority sanctioned the refund claim. Against this, appeal was filed by the department contending that the appellants are not eligible for refund. The Commissioner (Appeals) vide order impugned herein allowed the appeal of the department holding that the refund sanction is erroneous that appellant is not eligible for refund to the tune of Rs.16,93,074/-. Hence this appeal.

Observation of the Tribunal

It is not in dispute that the appellants are eligible for credit to the tune of Rs.16,93,074/- on the service tax paid by them under reverse charge mechanism on input services availed by them. The only reason for denying the credit is that they have not reflected such availment of credit in ST-3 returns for July, 2013 to September, 2013. The services having been exported, the service tax paid on the input services used for export of services should be refunded to the appellants as per Rule 5 of Cenvat Credit Rules, 2004. The appellants have properly accounted in their books of account. Not mentioning the credit availed in ST-3 returns is only a procedural lapse, which can be condoned.

From the above discussions, the court holds that the appellants are eligible for refund as claimed by them. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any.