2014 (12) TMI 205 - AT - Service Tax

Denial of refund claim - use of specified services in export of goods - Notification No. 17/2009-ST dt. 07.07.2009 - Whether refund claim filed by the appellant is eligible in view of the fact that service tax liability was not discharged by the appellants - Held that - Assessee have not paid service tax to the provider of the service and instead made the payment of service tax involved under section 68 (2) of the Finance Act, 1994. Further, condition 2 (a) of the said notification no. 17/2009-ST stipulates that the person liable to pay service tax under section 68 of the said Act on the specified service provided to the exporter and used for export of the said goods shall not be eligible to claim exemption for the specified service. As the respondents were liable to pay the said amount of service tax under Section 68 (2) of the Act and they accordingly discharged the said liability, they shall not be eligible to claim exemption for specified services in view of the condition 2(a) of the said notification. Thus, there is strength in the contentions of the department that the said amount of refund claim is not as per proviso (c) to para 1 and condition 2(a) of the Notification no. 17/2009-ST dated 7.7.09. As such, the sanction of the said refund claim vide the impugned order is not in accordance with provisions of the said notification no. 17/2009-ST and therefore, the sanction of the said amount vide the impugned order is erroneous and is set-aside - Decided against assessee.

Summary

Issues:
Refund claim under Notification No. 17/2009-ST disallowed due to non-payment of service tax by the appellant.

Analysis:
The appellant appealed against the rejection of their refund claim under Notification No. 17/2009-ST by the Commissioner (Appeals). The appellant's counsel argued that the appellant should be allowed credit for the GTA service paid under Reverse Charge Mechanism. The counsel referred to the conditions of Notification No. 17/2009-ST, emphasizing the requirement for the exporter to have paid the service tax on the specified service used for export of goods and not taken CENVAT credit under the CENVAT Credit Rules, 2004.

The Departmental Representative (DR) contested the appellant's claim, stating that the appellant did not pay the service tax to the service provider but discharged the liability under section 68 (2) of the Finance Act, 1994. The DR argued that as per the conditions of Notification No. 17/2009-ST, the appellant, being liable to pay service tax under section 68 of the Act, was not eligible for exemption for the specified service used for export.

The Commissioner (Appeal) thoroughly examined the issues and found that the refund claim was not in compliance with the provisions of Notification No. 17/2009-ST. The Commissioner noted that the Ministry's clarification stated that the notification applied even for exports made before its issuance, subject to certain conditions. The Commissioner held that the refund claim should meet the conditions of the notification for eligibility.

The Department contended that the refund claim for the freight incurred on transportation of exports was not in line with the conditions of Notification No. 17/2009-ST as the appellant did not pay the service tax to the provider but discharged the liability under section 68 (2) of the Finance Act, 1994. The Department argued that the appellant was not eligible for exemption under the notification due to this non-payment.

The Tribunal agreed with the Commissioner (Appeal) and upheld the dismissal of the appeal, stating that there was no ground to interfere with the findings. The Tribunal found that the refund claim was not in accordance with the provisions of Notification No. 17/2009-ST and set aside the sanction of the refund claim.

In conclusion, the Tribunal dismissed the appeal, emphasizing the importance of complying with the conditions of the notification for the eligibility of refund claims related to service tax payments for exports.