2013 (12) TMI 1622 - AT - Service Tax

Rejection of Refund claimed by service recipient - ground alleged for rejection of refund claim is that refund can be claimed only by the person who has paid the service tax and the appellant who is the service recipient is not eligible for claiming of refund - GTA Service - Held that - This ground is patently absurd and irrational - Notification No. 41/2007 which provides exemption through a refund mechanism clearly and unequivocally states that it is the exporter who can refund claim and not the service provider except in a situation where the exporter and the person discharging the tax liability is one and the same - rejection of refund claim is unsustainable in law. Refund claim - service tax on transportation charges incurred from the port/container yard to the factory in respect of empty containers - denial on account of nexus - Held that - The issue is settled in favor of the appellant in the case of Vippy Industries Ltd. v. CCE Indore 2014 (8) TMI 377 - CESTAT NEW DELHI where it was held that the appellant would be eligible for refund of service tax on transportation charges incurred from the port/container yard to the factory in respect of empty containers as the said transportation was in connection with the exports undertaken and therefore there is a nexus between the transportation of empty containers with the export of the goods - refund allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Refund claim rejection based on service tax payment eligibility and transportation cost breakdown for GTA service.

Analysis:
1. Refund Claim Eligibility: The appeals challenged Order-in-Appeal Nos. SB/85/Th-I/2010/1347, SB/93/Th-1/2010/1441, SB/90/Th-I/2010/1433, and SB/86/Th-I/2010/1352 passed by the Commissioner of Central Excise (Appeals), Mumbai. The issue revolved around the rejection of refund claims on the grounds that only the person who paid the service tax is eligible for claiming a refund. The appellant, as the service recipient, contended that the refund claims were filed under Notification No. 41/2007-S.T., which exempts specified taxable services used in export, with the exporter being entitled to claim the exemption and subsequent refund. The appellant argued that the rejection based on the service tax payment eligibility was irrational and unsustainable in law.

2. Transportation Cost Breakdown: Regarding the GTA service, the rejection of refund claim was also based on the breakdown of transportation costs. The transporter's invoice included charges for transporting empty containers from the port/container yard to the factory and from the factory to the place of export. The rule stipulated that only the service tax for transportation from the factory to the port was admissible. The appellant cited precedents where the Tribunal ruled in favor of refund eligibility for transportation of empty containers in connection with exports, establishing a nexus between the transportation and export activities. The appellant argued that the rejection of the refund claim on this ground was unsustainable in law.

3. Judgment: The Tribunal, after considering submissions from both sides, found in favor of the appellant on both issues. Firstly, the Tribunal upheld that the rejection of the refund claim based on the service tax payment eligibility was irrational and unsustainable in law as per Notification No. 41/2007. Secondly, the Tribunal ruled that the rejection of the refund claim concerning the transportation cost breakdown for GTA service was also unsustainable, citing precedents supporting refund eligibility for transportation of empty containers connected to export activities. Consequently, the appeals were allowed with any consequential relief deemed appropriate in accordance with the law.