2011 (2) TMI 779 - AT - Service Tax

Waiver of pre-deposit - Application for stay - Refund - principles of natural justice - Notification No. 33/2008-ST dated 07.12.2008 - On the date of filing of application for refund the notification in existence provided for refund of service tax on the basis of 10% ceiling and without any restriction relating to drawback - Even though this observation was made in the month of August and in December the notification was amended to provide that even where drawback was availed refund of service tax can be given - It is settled law that exemption notifications have to be interpreted strictly and they have only prospective effect and retrospective effect cannot be given unless specifically provided for - since the finished goods would have exempted from the service tax and therefore service provider would have claimed for which separate procedure would have been set out - admittedly the dates of export in respect of which refunds have been rejected are prior to the date of amendment - Held that exemption would be operative from the date of amendment of notification and has nothing to do with the date of filing of refund claims - Decided against the assessee

Summary

Issues:
1. Refund claims filed by M/s. Arvind Limited were sanctioned but later reviewed, leading to demands for refunds with interest.
2. Interpretation of Notification No. 33/2008 regarding the refund of service tax on commission paid to Commission Agents and the claim of drawback.
3. Whether the amendment in the notification should be applied retrospectively or only to claims filed after the amendment date.

Analysis:
1. The Tribunal considered multiple appeals together involving refund claims by M/s. Arvind Limited that were initially sanctioned but later reviewed by the Commissioner, resulting in demands for refunds with interest. The appeals were related to service tax paid for services utilized for exporting goods under Business Auxiliary Services classification.

2. Notification No. 33/2008 amended the commission ceiling to 10% and removed restrictions on drawback claims. The appellants claimed refunds based on this amendment, arguing that the notification should apply to claims filed after the amendment date, not the date of export or service. However, the Revenue contended that the refund eligibility concerning exports made after 07.12.2008.

3. The Tribunal analyzed the legal aspects of the exemption notification (No. 41/2007) strictly, emphasizing that exemption notifications should be interpreted strictly and have prospective effect unless specified otherwise. The Tribunal highlighted that the exemption in this case was granted through refund of service taxes paid, not a direct exemption. Therefore, the date of export, not the refund claim filing date, was deemed relevant for determining eligibility for refunds.

4. Despite the logical arguments presented by the appellants, the Tribunal upheld the Commissioner's view that the exemption under the notification operated from the date of its amendment. The Tribunal illustrated this with an example, emphasizing that if the notification provided for exemption instead of a refund, the date of export would have been crucial. As the export dates for the rejected refund claims were before the amendment date, the Tribunal concluded that the appellants had no case, leading to the rejection of all refund claims based on the legal grounds discussed.

In conclusion, the Tribunal dismissed the refund claims, emphasizing the strict interpretation of exemption notifications and the relevance of the date of export in determining eligibility for refunds under the amended notification.