Johnny and Service Tax Refund [Series-II] Part 5: Condition relating to Time Limit of One year

[Pradeep Jain]

By: -

CA. Pradeep Jain

Mayank Palgauta

Visit us at: www.capradeepjain.com

In continuation of previous articles, structuring complicatedness involved in getting the refund claim under various conditions relating to "Invoice, CHA service, Port services, and Amount of Rs. 500/-", we in this article are unveiling the problems existing in the Service tax refund mechanism under various services as specified in the Notification No. 17/2009-ST (herein after referred to as Said Notification). For example CHA service, Port Service, Courier Service and Insurance Service etc. This is the fifth article in the series wherein the complete scenario is being elaborated with the means of humorous poems and conversation between Johnny (an assessee) and his father but the main motive is to bring out the problems faced by exporters.

Johnny and Jill went up the hill, to get the refund order

Johnny came back with a lack

And Jill came hopeless after.

The assesses claiming refund orders under above mentioned services are experiencing enormous complexities in getting their refund orders passed on vague and futile justifications that not only are annoying and irritating the assessees but also deprives away the faith of assessees on the refund mechanism designed by the Government. Such reasons on which the department is refusing the refund claims on the said services are being written out hereunder as follows: -

Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

No Papa,

What's the reason?

This papa: -

Johnny says:  I went to the department to get the refund for various specified services availed by me in relation to export of goods, but department said: -

Johnny-Johnny go away,

Come again another day.

Your refund order has following Flay: -

The order passed by Adjudicating Authority says that the claim of service tax under said notification was filed by us for the consignments shipped before 07.07.2009. Thus the claim is not acceptable as "bar of limitation" applies in our case. This is one of the pre conditions for availing the benefit of refund claim that the goods should be given let export order before 07.07.2009 under said notification. The notification came on 7.7.2009 and as such refund claim prior to this date cannot be filed.

Johnny's View: 

In relation to the allegation of time barred claim it is submitted that as per notification the refund claim should be filed within one year from the date of export of the goods. As such the "date of export" will be the date which will be considered for time limit of filing of refund claim. In our case the "Let Export Order" has been given in Shipping Bill the date which was coming first from the date of Export of Goods. In this regard the relevant bill of lading has already been duly submitted by us. Hence the date of export is the day the goods left the Indian Territory. Thus the date of export is after 7.7.2009. As such this is very much covered under this notification as this is applicable from 07.07.2009. Hence the claim does not come under the purview of bar of limitation.

Johnny says:  I went to the department next day again with the above submission but department said: -

Johnny-Johnny go away,

Come again another day.

Your refund order has following more flay: -

The Adjudicating Authority alleges that the date of export of goods will be the date as prescribed in the explanation given in the notification. But we have not filed within prescribed time limit and therefore the refund is rejected.

Johnny's View:

In regard to the above, we submit that as per explanation date of export will be the date as provided in section 51 of the Customs Act, 1962. The relevant provision is reiterated hereunder:-

Clearance of goods for exportation- Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation.

As such it is provided in the above mentioned section that the date of export will be the date on which the proper officer makes the order for clearance of the goods for export. Hence the claim is within time limit.

However, if we accept for the sake of argument only that the date of export will be let export order date than the claim is covered under the notification no. 41/2007 which prescribe the time limit of six months. But the claim will then also within the time lime. Now the section 11B of the Central Excise Act, 1944 will be applicable in our case, in which the time limit for refund claim is one year. For supporting their contention the appellant has referred the case of CCE, Pondicherry vs G. Jijith Kumar [2009 -TMI - 78847 - CESTAT, CHENNAI] in which the refund claim was allowed which was filed beyond the time limit prescribed in the notification, with referring the section 11B of the Central Excise Act, 1944. But the department merely said that the facts of the above case are not similar to this case. Further the appellant has submitted the case of M/s Ford India Pvt. Ltd. Vs. CCE, Chennai [2010 -TMI - 78848 - CESTAT, CHENNAI], in which it was held that

Central Excise -Refund of duty paid on motor cars registered as taxis-Limitation - refund claims rejected on the ground that they were filed beyond 6 months period from the date of payment prescribed under the Notification- Statutory period of one year as prescribed under the Section 11B is applicable and the refund claims cannot be held to be barred by the limitation.

Hence in the above case the refund has been allowed in terms of section 11B of the Central Excise Act, 1944 beyond the time limit as prescribed in the notification. The same ratio is applicable in our case also. But the case is not discussed by the department. Hence this has proved to be a non reasoned order which is not justified in the light of decision of hon'ble Apex Court in the case of State of Himachal Pradesh Vs Sardara Singh [2008 -TMI - 78849 - Supreme Court of India]. In this case it is decided as follows:-

Even High Courts are required to pass speaking reasoned orders - The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance. The manner in which appeal against acquittal has been dealt with by the High Court leaves much to be desired. Reasons introduce clarity in an order. On plainest consideration of justice, the High Court ought to have set forth its reasons, howsoever brief, in its order indicative of an application of its mind, all the more when its order is amenable to further avenue of challenge. The absence of reasons has rendered the High Court order not sustainable. The requirement of indicating reasons in such cases has been judicially recognized as imperative. Judicial discipline to abide by declaration of law by this Court, cannot be forsaken, under any pretext by any authority or Court, be it even the Highest Court in a State, oblivious to Article 141 of the Constitution of India. Reasons are live links between the mind of the decision taker to the controversy in question and the decision or conclusion arrived at. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system, reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made, in other words, a speaking out. The "inscrutable face of a sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance.: SUPREME COURT;

The analysis of this decision makes it clear that the order passed without giving reasons of decision is not justified in the eyes of law. In the instant case various case laws referred in the reply of show cause notice has not been discussed and distinguished by the learned adjudicating authority. Hence the ratio of above cited case should be allowed and the impugned order is liable to be set aside.

Johnny says:  I went to the department next day again with the further submissions but department rejected saying: -

Johnny-Johnny go away,

You won't get refund anyway.

It has following more flay: -

In this time a new and distinct allegation has been raised by the department. It was said that at the time of filing refund claim the assessee has either produced some of the photocopies of the original invoices or has not certified the invoices as per the provision of the said notification. Thereafter the same requirement has been fulfilled and submitted to the department on being pointed out by the department. The department said that the same is done after expiry of one year. The claim is to reckoned as filed when the all the requirements of notification is fulfilled. The claim filed by the assessee is NOW "time barred".

Johnny's view: -

In this respect we submit that just the certification which was done by us was found to be incomplete by the department which has been done again and filed later on. But this cannot be the basis for saying that the claim was now time barred. The certification was just a procedural part that was finally completed by the appellant. The date of calculating the bar of time limit will remain the date on which refund claim has been filed for the first time.  The cases relied by the appellant in this regard are-

§        COMMISSIONER OF C. EX., DELHI-I Versus ARYA EXPORTS AND INDUSTRIES [2005 -TMI - 47510 - HIGH COURT OF DELHI]

§        DURALINE INDIA PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, GOA [2008 -TMI - 33884 - CESTAT MUMBAI]

§        SUPER SPINNING MILLS LTD.  Versus COMMISSIONER OF C. EX., COIMBATORE [2007 (219) E.L.T. 958 (Tri. - Chennai)]

§        IN RE : SUN PHARMACEUTICALS INDUSTRIES LTD. [2004 (171) E.L.T. 509 (Commr. Appl.)]

§        SIMPLEX GLOBAL IMPEX Versus COMMISSIONER OF C. EX., NAGPUR [2002 (145) E.L.T. 470 (Tri. - Del.)]

§        SUPER SPINNING MILLS LTD. Versus COMMISSIONER OF C. EX., COIMBATORE [2009 -TMI - 75444 - CESTAT, CHENNAI]

Refund - Limitation - Claim for revised amount after expiry of prescribed time in response to clarifications from Department - Revised amount also being part of original claim - As original claim was within time, rejection of revised claim as being time barred, found to be improper - Section 11B of Central Excise Act, 1944. [para 7]

All the above referred cases say that the date of filing the refund claim will be the date on which the refund claim was originally filed and not the date when some additional documents were added to the refund claim. Further the certification is just a procedural mistake on the behalf of us and the refund claim cannot be denied on such grounds. We submit that we have submitted the letter for certificate duly signed by us in which it is clearly certified that the impugned services has been used in the export only and the service tax has been already paid thereon. Hence we have fulfilled the condition mentioned in the notification. There was no intention for not giving the proper certificate. Hence, the analogy drawn by the order is totally wrong and hence the refund should be allowed.

Fruitless again & again;

Johnny now in grief and pain!

Refund order now a dream;

His efforts have downstream!

Via this article the sole endeavor is to picturize the problems faced by assesses in getting the refund order as against condition relating to time limit of one year. With this entertaining and rhythmical article we summarize that the present situation and mental state of assesses alleging refunds against export of goods is alike to the situation of Johnny as pointed out in the poem.

There are a number of conditions subject to which the refund is allowed. The assessee is facing difficulty in almost all of those conditions. Due to the large number of conditions we were not able to cover all the conditions in this article and hence we will be bringing further articles on the different conditions covered therein. Keep visiting for the next article....