2017 (1) TMI 1447 - AT - Service Tax

Refund claim - whether the appellant is entitled to refund of service tax paid on clearing and forwarding agent services utilized for the purpose of export with respect to export transaction during the period from July to September, 2008, in view of amendment to N/N. 41/2007 vide N/N. 33/2008-ST dated 07/12/2008, when in the Schedule to the earlier notification Item No.19 was inserted for services received by an exporter that were provided by a clearing and forwarding agent in relation to export or goods exported by the exporter? Held that - the addition of C & F Service vide N/N. 07/12/2008 being entry number 19 in the schedule to N/N. 41/2007 is clarificatory in nature. Accordingly, following the ruling of Hon ble Bombay High Court in the case of WNS Global Service (P) Ltd. Versus Commissioner of Service Tax, Mumbai 2008 (1) TMI 94 - CESTAT, MUMBAI , the appellant is entitled to refund of input services including C & F services received prior to 07/12/2008 as the same have been utilized for the purpose of export of goods. The other ground of rejection also does not stand that the appellant also availed duty drawback in view of deletion of proviso (e) in N/N. 41/2007 vide amending N/N. 33/2008. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Entitlement to refund of service tax paid on 'clearing and forwarding agent services' for export transactions.
- Eligibility for refund of input services utilized in export.
- Interpretation of retrospective application of amendments to notifications.
- Applicability of rulings on similar cases.

Analysis:

Issue 1: Entitlement to refund of service tax on 'clearing and forwarding agent services'
The Tribunal examined whether the appellant, an exporter, is entitled to a refund of service tax paid on 'clearing and forwarding agent services' utilized for export transactions during a specific period. The amendment to Notification No.41/2007 introduced entry No.19 for services provided by a 'clearing and forwarding agent' in relation to export or goods exported by the exporter. The Tribunal held that the addition of Clearing & Forwarding (C & F) Services in the schedule to Notification No.41/2007 was clarificatory in nature. Relying on a ruling of the Bombay High Court, the Tribunal concluded that the appellant is entitled to a refund of input services, including C & F services utilized before the amendment date.

Issue 2: Eligibility for refund of input services utilized in export
The Tribunal considered the appellant's claim for a refund of service tax paid on various input services utilized for export. The appellant's refund claims were rejected on the grounds of availing duty drawback and the non-retrospective nature of the amendment to the notification. However, the Tribunal held that the appellant is eligible for a refund of input services, including port charges, as the amendment was not retrospective in nature and the appellant fulfilled all conditions for the refund.

Issue 3: Interpretation of retrospective application of amendments
The Tribunal analyzed the retrospective application of amendments to notifications concerning service tax refunds. Citing legal principles and precedents, the Tribunal emphasized that a statute cannot be treated retrospectively if it impairs vested rights or creates new obligations. The Tribunal clarified that the appellant's claims for refunds filed before the amendment date should be governed by the rules as they stood on those dates, and any claim satisfying the requirements cannot be rejected based on retrospective application.

Issue 4: Applicability of rulings on similar cases
The Tribunal referred to a Division Bench ruling on a similar case involving the refund of unutilized credit for exports. The Tribunal highlighted that the substituted Rule 5 did not make a distinction between exports made before or after the amendment date, allowing refunds for unutilized credit to manufacturers and providers of output services. Relying on this ruling, the Tribunal allowed the appellant's appeal for a refund of input services, directing the Adjudicating Authority to grant the refund within a specified period with interest.

In conclusion, the Tribunal allowed the appeals, set aside the impugned orders, and directed the refund of input services, including C & F services, within a specified timeframe, based on the appellant's entitlement and fulfillment of refund conditions.