2011 (1) TMI 810 - AT - Service Tax

Export of goods - Refund of service tax paid on input services - Notification No.41/2007-ST, dated 06.10.2007 - The original authority has also found on verification of the invoices from the service provider that there is a general co-relation between the export goods and the invoices from the Technical Testing & Invoices Service - It is not denied that the exports to Sweden should meet the standards and specifications provided by IKEA so that the export goods are accepted by the buyer in Sweden - It is the policy of the Government to encourage exports and not to burden the export consignments with domestic taxes like the service tax, which is paid in relation to the input service - refund allowed.

Issues:
1. Refund of service tax for Technical Testing & Analysis Service.
2. Fulfillment of conditions specified in Notification No.41/2007-ST.
3. Cryptic order of lower appellate authority denying refund.
4. Examination of documents by original authority before granting refund.
5. Co-relation between service provider invoices and export goods.
6. Compliance with IKEA specifications for export goods.

Analysis:
1. Refund of service tax for Technical Testing & Analysis Service:
The case involved a dispute over the refund of service tax paid for Technical Testing & Analysis Service. The lower appellate authority disallowed the refund citing non-fulfillment of conditions specified in Notification No.41/2007-ST. However, the original authority examined the documents submitted by the appellants and allowed the refund after finding a correlation between the testing services and the export goods. The appellate tribunal noted that the tests were conducted as per the buyer's requirements, making the claim for refund allowable.

2. Fulfillment of conditions specified in Notification No.41/2007-ST:
The lower appellate authority's decision to deny the refund was based on the alleged failure to fulfill the conditions specified in Notification No.41/2007-ST. However, the original authority's detailed examination of the documents submitted by the appellants revealed that the testing services were in compliance with the requirements stipulated by the buyer, thus meeting the conditions for refund.

3. Cryptic order of lower appellate authority denying refund:
The appellate tribunal criticized the lower appellate authority for issuing a cryptic order denying the refund without providing substantial reasoning or analysis. In contrast, the original authority's order was detailed and supported by a thorough examination of the documents, leading to the conclusion that the denial of refund by the lower appellate authority was unjustified.

4. Examination of documents by original authority before granting refund:
The original authority's decision to grant the refund was based on a meticulous examination of the documents submitted by the appellants, including invoices and specifications. The authority noted the correlation between the testing services and the export goods, ultimately leading to the conclusion that the conditions for refund were met.

5. Co-relation between service provider invoices and export goods:
The original authority found a significant correlation between the invoices issued by the Testing & Analysis Service Provider and the export goods. This correlation was crucial in establishing that the testing services were directly related to the export goods, justifying the refund of the service tax paid for such services.

6. Compliance with IKEA specifications for export goods:
The appellants submitted IKEA specifications for textiles to demonstrate compliance with the standards required by the buyer in Sweden. The original authority acknowledged that the tests conducted were in conformity with the buyer's requirements, specifically mentioning the detailed testing requirements specified in the IKEA document. This compliance with buyer specifications further supported the decision to grant the refund.

In conclusion, the appellate tribunal upheld the original authority's decision to allow the refund of service tax for Technical Testing & Analysis Service, emphasizing the importance of fulfilling buyer requirements and demonstrating a clear correlation between the testing services and the export goods. The lower appellate authority's cryptic denial of the refund was deemed unjustified, leading to the restoration of the Orders-in-Original and the allowance of both appeals.

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