2012 (7) TMI 507 - AT - Service Tax

Effect of amended notification change - Notification No.41/2007 - Held that - The impugned Notification No.41/07 is a different kind of notification essentially granting a refund of service tax paid on services used in relation to export of goods - the cited notification has been amended to facilitate Indian exports to be freed from domestic taxes and to make them competitive in the international market and the Board in its circular dt. 12.3.2009 clarified that the amended provision as in existence on the date of filing the refund may be applied in preference to the legal position that normally the provisions as applicable at the time of export be applied.

Summary

Issues: Interpretation of Notification No.41/2007 for refund claim; Applicability of amended provisions; Retrospective application of amendment

In this judgment by Chittaranjan Satapathy, the main issue revolves around the interpretation of Notification No.41/2007 for a refund claim. The appellant argued that the original authority correctly sanctioned the refund amount based on the notification applicable at the time of filing the claim. However, the Jurisdictional Commissioner revised the order, limiting the refund to 2% of the FOB value based on the unamended notification at the time of export. The appellant relied on a Tribunal decision in the case of Faizan Shoes to support the application of the amended provision at the time of filing the claim.

The Department, represented by the ld. DR, contended that amendments to exemption notifications are valid only from the date of the amendment and do not have retrospective application. To support this argument, the Department cited various legal precedents, including Kartar Rolling Mills Vs CCE New Delhi, CC Bangalore Vs Spice Telecom, and Karvembu & Co. Vs Under Secretary, Dept. of Revenue.

After considering the submissions from both sides and reviewing the case records and cited decisions, the judge found that Notification No.41/2007 is unique as it pertains to granting a refund of service tax for services used in relation to export of goods. The Tribunal's decision in the Faizan Shoes case highlighted the amendment's purpose to support Indian exports by freeing them from domestic taxes. The judge noted a circular by the Board emphasizing the application of the amended provision at the time of filing the refund claim, contrary to the general practice of applying provisions at the time of export.

Consequently, the judge concluded that the Tribunal's precedent in the Faizan Shoes case, aligning with the Board's circular, should guide the current case. The original authority's decision to sanction the refund based on the amended provision at the time of filing the claim was upheld, leading to the setting aside of the Order-in-revision and allowing the appeal.