I-26(494)ST/Adt/Gr.

B-VI/Refund/RBS/16/2009

OFFICE OF THE COMMISSIONER OF SERVICE TAX

17B, IAEA HOUSE, I.P.ESTATE, M.G.MARG, NEW DELHI-110002
C.No. I-26(494)ST/Adt./Gr B-VI/Refund/RBS/16/2009

Dated:

.2012

SHOW CAUSE NOTICE

M/s RBS India Development Centre Pvt. Ltd. Building No. 7B, DLF Cyber City,
DLF Phase-III, Gurgaon-122001 (Haryana) (hereinafter referred to as the Applicant)
registered with the Service Tax Range-I of Division-III, Gurgaon under the taxable services of
Information

Technology

Software

Services having

Service

Tax

Registration

No.

AAACC2526JST002 filed a refund claim on 27.08.2009 seeking refund of unutilized CENVAT

Credit amounting to Rs. 1,06,89,319/- under Rule 5 of the CENVAT Credit Rules, 2004 read
with Notification No. 5/2006-CE (N.T.) dated 14.03.2006 for export of services during the month
of July, 2009 from 01.07.2009 to 31.07.2009.
The applicant further filed a revised refund claim application dated 18.03.2011 with the
department on 25.03.2011 revised its refund of unutilized CENVAT credit amounting to Rs.
59,33,743/- in the prescribed form A.
2

The applicant had filed the refund claim in prescribed Form A and following documents

were submitted in support of the above claim:

(a) Details of output service exported vide 03 invoices of total value GBP 55,35,609 (Rs.
43,82,69,664/-) to M/s Royal Bank of Scotland, PLC, UK.
(b) Photocopies of above mentioned 03 invoices for the output services exported
described as Information Technology Software Services for the month of July, 09.

I-26(494)ST/Adt/Gr.B-VI/Refund/RBS/16/2009
(c) Service Tax input CENVAT Credit Register containing details of input service used in
providing service exported and service tax thereon alongwith invoice details for the
period of 1st July, 2009 to 31st July, 2009.
(d) Details regarding justification of input services used for providing the output service.
(e) Details regarding the services exported (output services)
(f) Photocopies of relevant invoices for their input services utilized evidencing input
CENVAT Credit of Rs. 59,33,743/-.
3.

The original claim was forwarded by the Assistant Commissioner, Service Tax, Division-

III, Gurgaon to the Audit Group (B-VI) for further processing as per Office Order dated
03.12.2009 and 04.12.2009 issued by the Commissioner of Service Tax, New Delhi and the
revised claim was forwarded vide letter ___________________.
4.

Accordingly, the original refund claim was further processed and letters dated

29.12.2009, and 25.01.2010 were issued to the applicant seeking certain documents and
clarification.
5.

On going through the facts of the case on record and submissions of the applicant, I

propose to examine the following aspects in respect of the aforesaid refund claim:
(i)

Whether the applicant has filed the Refund application within time.

(ii)

Whether the applicant has submitted copies of all the relevant documents required
to substantiate their claim.

(iii)

Whether the applicant is entitled to apply for refund of CENVAT credit as per rule
5 of the CENVAT Credit Rules, 2004.

(iv)

Whether the calculation of refundable CENVAT credit adheres to condition No. 5

of Notification No. 05/2006-CE(NT) dated 14.03.2006.

I-26(494)ST/Adt/Gr.B-VI/Refund/RBS/16/2009
(v)

Whether the applicant has actually exported taxable services in term of Export of
Service Rules, 2005 read with Circular No. 111/05/2009-ST dated 24.02.2009 and
120/01/2010-ST dated 19.01.2010.

(vi)

Whether the applicant has already realized full export proceeds of the services
exported in convertible foreign exchange.

(vii)

Whether the input services, on which CENVAT credit has been availed, have been
used in providing the exported services.

6.

In this regard, on scrutiny the verification of the records, the following has been

observed:
(i)

The CENVAT credit can only be availed after the payment of the input service
have been made as provided under Rule 4(7) of the Cenvat Credit Rules, 2004.
However, it has been noted that in respect of certain input invoices, the payment
was made after July 2009. A list of the same has been prepared and is attached
herewith as Annexure-A. As per that list an amount of Service Tax of Rs.
50,12,284/- is involved in the cases where the payment has been made after July,
2009. In such cases, the CENVAT credit was not admissible during the month of
July, 2009. Hence, the question of refund does not arise.

(ii)

Since, the CENVAT credit Rules, 2004 provide certain conditions for availment of
CENVAT, such as the Credit can only be availed on the strength of an invoice, the
invoice should have been in the name of the concern availing the CENVAT, it
should bear the Service Tax Registration number, Classification of service,
address of the service receiver etc, the verification of invoices revealed certain
discrepancies on some of the invoices, listed as Annexure-B of this Notice. The
amount of service tax involved on this account is Rs. 71,033 and is liable to
rejection from refund claim.

(iii)

As per Circular No. 98/1/2008-ST, the Board has given the following clarification
about works contract in relation to CENVAT credit Rules, 2004 vide their Letter

I-26(494)ST/Adt/Gr.B-VI/Refund/RBS/16/2009
F. No. 345/6/2007-TRU dated 4th January, 2008 that Commercial or Industrial
construction service or works contract service is an input service for the output
namely immovable property. Immovable property is neither subjected to central
excise duty not to service. Input credit of service tax can be taken only if the
output is a service liable to service tax or a goods liable to excise duty. Since
immovable property is neither service or goods as referred to above, input
credit cannot be taken. Hence, input credit taken on works contract does not
appear to be admissible and hence an amount of Rs. 8,07,788/- appears to be
liable for rejection from refund claim (Annexure-C).
(iv)

There are some invoices of input service availed by M/s RBS India Development
Centre Pvt. Ltd. at the address of Unitech Business Park, Block F, South City,
Phase-I, Sector-41, Gurgaon-122001 and other places which was not registered
under Service Tax Department during the period from 01.07.2009 to 31.07.2009.
Since, these invoices are not admissible under the purview of CENVAT credit
Rules, 2004 an amount of Rs. 20,59,008/- appears to be in-admissible (AnnexureD).

7.

In view of the above and in terms of CENVAT credit rules, 2004, Notification No. 5/2006

dated 14.03.2006, M/s RBS India Development Centre Pvt. Ltd., Building No. 7B, DLF cyber
City, CLF Phase-III, Gurgaon-122001 are hereby called upon to show cause to the Deputy
Commissioner of Service Tax, 17-B, IAEA House, I.P.Estate, New Delhi-110002 within 30 days
as to why the refund claim for the period August 2009 should be rejected for not complying with
the provisions of CENVAT Credit Rules, 2004 & Notifications No. 5/2006 dated 14.03.2006.
8.

M/s RBS India Development Centre Pvt. Ltd. are further directed to produce at the time

of showing cause the evidence upon which they intend to rely in their defense. They are further
required to state in their reply as to whether they wish to be head in person before the case is
adjudicated. If they make no such request, it would be presumed that they do not desire any
personal hearing.

I-26(494)ST/Adt/Gr.B-VI/Refund/RBS/16/2009
9.

If not cause is shown within the stipulated period, against the action proposed to be taken

here above or if they do not appear before the adjudicating authority when the case is posted for
hearing, the case will be decided ex-party on the basis of evidence available on record without
any further reference to them.
10.

This notice to show cause is being issued without prejudice to any other action, which

may be taken against the applicant under the Finance Act, 1994 or any other law for the time
being in force or any other demand of Service Tax which may be issued to them in respect of the
services(s) referred herein above or services other than those covered by this notice, if any,
provided by the party.

(PANKAJ JAIN)
DEPUTY COMMISSIONER
SERVICE TAX (AUDIT)
Encls: Annexure A, B, C & D
Regd. Ad/BY Hand
To
M/s RBS India Development Centre Pvt. Ltd.
Building No. 7B, DLF Cyber City,
DLF Phase-III, Gurgaon
.