2013 (12) TMI 330 - AT - Service Tax

Denial of refund claim - Benefits under exemption Notification No. 41/2007-ST dated 16.10.2007 - Terminal handling charges - Assistant Commissioner sanctioned refund claim - Revenue claims partial recovery claiming exemption inapplicable in respect of terminal handling charges - Held that - Notification No. 17/2009-ST is an exemption Notification issued by the Central Government in exercise of powers conferred under Section 93(1) of the Finance Act, 1994 (the Act). By this Notification, the taxable services specified in column (3) of the table (appended to the Notification) received by an exporter of goods and used for export of goods pertaining to the enumerated sub-clauses of Section 65(105) as specified in the corresponding entry in column (2) of the table are exempted from the whole of the service tax leviable under Section 66 and 66A of the Act, subject to the conditions set out in the table. On a true and fair construction of the relevant entry at Sl. No. 2 of the table under exemption Notification No. 41/2007-ST, the inference is compelling that any service provided in relation to port services in a port, in any manner to an exporter and where such service is used for export is exempted from whole of the service tax leviable under Section 66 and Section 66A of the Act - By reference to the exemption provided at Sl. No. 16 of the table in Notification No. 17/2009-ST, the adjudicating authority inferred; and in the considered view of this Tribunal erroneously, that terminal handling charges when provided within the port do not fall under port services vide the Notification No. 41/2007-ST. This conclusion of the adjudicating authority which found resonance in the order of the Commissioner (Appeals), is in my considered view erroneous and proceeds on a fallacious interpretation of the provisions of Notification No. 41/2007-ST - Decided in favour of assessee.

Summary

Issues:
1. Refund claim under exemption Notification No. 41/2007-ST.
2. Interpretation of Notification No. 17/2009-ST regarding terminal handling charges.
3. Adjudication of service tax exemption for port services in relation to exports.

Analysis:
1. The appellant filed a refund claim under Notification No. 41/2007-ST for services related to export, which was granted by the Assistant Commissioner. However, the Revenue later sought recovery of a portion of the refund concerning terminal handling charges. The issue revolved around whether terminal handling charges were eligible for exemption under Notification No. 41/2007-ST or not. The Revenue contended that a later Notification, No. 17/2009-ST, excluded terminal handling charges from the exemption. The Tribunal found that the original order granting the refund was correct as the services were used for export, falling within the scope of the exemption.

2. Notification No. 17/2009-ST provided further exemptions for services used in exporting goods, including a specific exemption for terminal handling charges. The adjudicating authority and the Commissioner (Appeals) erroneously interpreted this exemption to exclude terminal handling charges from the scope of port services under Notification No. 41/2007-ST. The Tribunal disagreed with this interpretation, holding that terminal handling charges within the port do fall under port services, making them eligible for exemption under Notification No. 41/2007-ST.

3. The Tribunal concluded that the adjudicating authority's decision to recover a portion of the refund based on the interpretation of the exemption Notifications was incorrect. The order seeking recovery of the amount related to terminal handling charges was quashed, and the appeal was allowed in favor of the appellant. The Tribunal found that the services provided in relation to port services for export purposes were indeed eligible for exemption under Notification No. 41/2007-ST, and the recovery sought by the Revenue was unsustainable.