2026 Supreme(Online)(CESTAT) 1702

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
K. Anpazhakan, Technical Member
Hexaware Technologies Ltd. – Appellant
Versus
Commissioner Of GST & Central Excise – Respondent
Service Tax Appeal Nos. 41273 & 41274 of 2015

The eligibility of CENVAT Credit, once properly disclosed in returns and not challenged by the Revenue at the time of availment under Rule 14, cannot be reopened or denied at the time of processing a refund claim under Rule 5 of the CENVAT Credit Rules, 2004.

Headnote:(A) CENVAT Credit Rules, 2004 - Rule 2(l), Rule 5, and Rule 14 - Refund of accumulated CENVAT Credit - Input services received prior to 01.04.2011 - Definition of 'input service' included 'activities relating to business' - Whether the eligibility of CENVAT Credit, once disclosed in returns and not disputed at the time of availment, can be questioned at the stage of refund claim. (Paras 3, 6.1, 7)

(B) Appellate Jurisdiction - Scope - The Department cannot adopt two different yardsticks for determining eligibility of CENVAT Credit and eligibility of refund. (Paras 3.1, 6.1)

(C) Input Service Nexus - Services such as outdoor catering, club membership, general insurance for employees, staff transportation (rent-a-cab/bus hire), cafeteria rent, and support services to business are held to be integrally connected to business operations and eligible for CENVAT Credit during the period prior to 01.04.2011. (Paras 3.3, 7.1-7.6)

Facts of the case:
The appellant sought a refund of accumulated CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004, for services availed between 2009 and 2011. The authorities rejected the refund claims on the ground that the disputed services did not qualify as 'input services.' The appellant contended that these services were used in their business, and the Department failed to initiate proceedings under Rule 14 of the CENVAT Credit Rules at the time the credit was originally availed and disclosed.

Findings of Court:
The court observed that the Department failed to challenge the entitlement to CENVAT Credit at the time of its initial disclosure in returns. Relying on the Board's Circular No. 120/01/2010-ST and established judicial precedents, the court found it impermissible to question the eligibility of credit during the refund processing stage. Furthermore, on merits, the court held that the definition of 'input services' prior to April 2011 was broad enough to encompass all disputed services provided they had a nexus with business operations.

Issues: Whether the appellant is entitled to a refund of CENVAT Credit for services availed prior to 01.04.2011, and whether the Department can challenge the eligibility of CENVAT Credit at the time of a refund claim if it was not challenged at the time of availment.

Ratio Decidendi: Where CENVAT Credit has been availed and disclosed in returns without objection by the Department, its eligibility cannot be questioned subsequently during the refund process. Furthermore, for the period prior to 01.04.2011, the definition of 'input services' included 'activities relating to business,' which covers services essential for employee support and business operations.

Result: Appeals allowed.