2011 (10) TMI 261 - AT - Service Tax

Export of Service - rebate claim rejected as no declaration under para 3.1 was filed and assessee did not obtain the service tax registration - Held - Where appellant provided Business Auxiliary Services only to their clients abroad and their output services were being exclusively exported, they were not required to pay any duty Thus not required to obtain any registration Further rule 5 of export Rules or Notification No. 12/2005 do not mandate any registration. Filing of declaration and claiming rebate - held that - If the appellant every month were filing the required declaration, though after some delay, as in the case of CST Vs. Convergys India Pvt. Ltd. (2010 -TMI - 78078 - PUNJAB AND HARYANA HIGH COURT), the ratio of this judgement would be applicable and in that case, the delay would be condonable. If however the declaration under para 3.1 had not been filed at all or had been filed after the completion of export of service for which rebate had been claimed, and thereby depriving the sanctioning authority of the opportunity to verify the correctness of the declaration and satisfy himself that there is no possibility of evasion of duty by misuse of this facility, the requirement of para 3.1 & 3.2 cannot be said to have been satisfied and the rebate would not be admissible. - matter remanded to the original adjudicating authority for de novo adjudication of the matter.

Issues Involved:
1. Rejection of rebate claims due to non-compliance with procedural requirements.
2. Requirement of service tax registration for claiming rebate.
3. Filing of declarations prior to the export of services.

Detailed Analysis:

1. Rejection of Rebate Claims Due to Non-Compliance with Procedural Requirements:
The appellant's rebate claims were rejected by the jurisdictional Deputy Commissioner, Service Tax, on the grounds that the appellant did not follow the procedure prescribed in Notification No.12/2005-ST under Rule 5 of the Export of Service Rules, 2005. Specifically, the appellant failed to file a declaration under para 3.1 of the Notification and did not obtain service tax registration. The Commissioner (Appeals) upheld this rejection, emphasizing that the filing of the declaration prior to the export of services is a substantive condition to prevent misuse of the rebate facility.

2. Requirement of Service Tax Registration for Claiming Rebate:
The Tribunal found that the appellant, who provided Business Auxiliary Services exclusively to clients abroad, was not required to obtain service tax registration. This conclusion was based on the provisions of Rule 4 of the Export of Service Tax Rules, 2005, and Section 69 of the Finance Act, 1994, which link the requirement of obtaining registration with the liability for paying service tax. Since the appellant's services were exported and no tax was payable, the appellant was not required to obtain service tax registration. Moreover, neither Rule 5 of the Export of Services Rules nor Notification No.12/2005-ST mandated service tax registration for claiming rebate.

3. Filing of Declarations Prior to the Export of Services:
The Tribunal examined the procedural requirements under Notification No.12/2005-ST, which mandates the filing of declarations by the exporter of output services prior to export. This declaration is to be verified by the jurisdictional Assistant/Deputy Commissioner to ensure no evasion of duty. The Tribunal referred to the Supreme Court judgment in Indian Aluminium Company Ltd. vs. Thane Municipal Corporation, which held that non-observance of procedural conditions that prevent proper verification cannot be condoned. The Tribunal noted that if the declaration under para 3.1 was not filed at all or filed after the export, the rebate claim could not be sustained as it deprived the authorities of the opportunity to verify and prevent misuse of the facility. However, if the declarations were filed with some delay but before the completion of export, as in the case of CST Vs. Convergys India Pvt. Ltd., the delay could be condoned.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for de novo adjudication. The authority was directed to verify the appellant's claim that declarations were filed every month, albeit with some delay. If the declarations were indeed filed monthly, the delay would be condonable, and the rebate claim could be considered. If the declarations were not filed at all or only after the completion of export, the rebate would not be admissible. The appeal was disposed of by way of remand.

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