2016 (1) TMI 1192 - AT - Service Tax

Refund claim - N/N. 41/2007-ST dated 6th October 2007 - export of iron ore fines - technical testing and analysis services - port services - natural justice - Held that - It is a well-settled principle of natural justice that proceedings to the detriment of an assessee is not to be undertaken without issue of a notice justifying the proposed detriment and occasioning an opportunity to respond - The violation of principles of natural justice vitiates the proceedings. Also, the two lower authorities had not examined the several aspects which are crucial to disposal of the refund claim of the appellant, the entire application for refund requires reconsideration - appeal allowed by way of remand.

Summary

Issues:
Claim for refund of tax paid on 'technical testing and analysis services' and 'port services' utilized in export of 'iron ore fines' under notification No. 41/2007-ST; Rejection of refund claim due to failure to file within stipulated period and inclusion of 'customs house agent services' as exempted only from 2008; Allegation of lack of communication response leading to inability to rectify deficiencies; Violation of principles of natural justice; Failure to examine crucial aspects by lower authorities necessitating reconsideration of refund application.

Analysis:
The appellant sought a refund of tax paid on 'technical testing and analysis services' and 'port services' utilized in exporting 'iron ore fines' from Visakhapatnam port under notification No. 41/2007-ST. The appellant, not registered as a service provider, applied for a service tax code as required by the notification to file the refund claim. However, due to alleged lack of communication response and inexperience in service tax matters, the appellant also sought the refund on the same application submitted for the service tax code.

The appellant contended that the lack of response to their application hindered their ability to comply with the deadlines stipulated in the notification. The rejection of the refund claims by the original authority was based on the grounds of not filing within the specified period and the inclusion of 'customs house agent services' as exempted only from 2008. The appellant argued that they were not given the opportunity to rectify any deficiencies in their application or provide necessary information, thus alleging a violation of natural justice principles.

The Authorized Representative argued that the beneficiary of exemption must ensure strict compliance with the conditions, including time limits. It was also contended that documents issued by the customs house agent were not acceptable as evidence for the refund claim. The Tribunal observed that the lower authorities failed to examine crucial aspects, including the timely allotment of the service tax code and the payment for services like 'wharfage' and 'technical testing and analysis.'

The Tribunal found that the delay in allotting the service tax code by the proper officer was unexplained, leading to the inability of the appellant to meet the deadlines. As a result, the entire refund application needed reconsideration, including the date of code allotment and the period of export of goods. The impugned order was set aside, and the matter was remanded to the original authority for fresh consideration on all relevant issues, emphasizing the need for a comprehensive review of the refund application.