2014 (12) TMI 330 - AT - Service Tax

Denial of refund claim - Export of services - Discrepancy in FIRCs produced and the export undertaken - Notification No. 5/2006 dated 14/03/2006 - Revenue contends that Notification No. 5/2006 dated 14/03/2006 in clause (b) of the opening paragraph states that credit shall be allowed in respect of inputs or input service used in providing output service which is exported without payment of tax - Held that - Certificates have been corrected by the collecting bank and therefore, this objection would no longer be sustainable. However, the correct certificates were not available before the lower authorities when they rejected the claim and, therefore, the matter is remanded back to the refund sanctioning authority for consideration of the revised FIRCs now obtained by the assessee-appellant from the collecting bank and after considering the same, refund shall be granted to the appellant as per law. In any case, the department has not objected to the assessee-respondent taking the credit at the relevant time and the objection has been raised only at the time of filing of the refund claims. There cannot be two different yardsticks; one for permitting the credit and the other eligibility for granting credit. Whatever credit has been permitted to be taken, the same are permitted to be utilized and it is not possible to have two provisions, one for grant of refund or as rebate. Without questioning the credit taken, the eligibility to refund cannot be questioned. - Following decision of Commissioner of Service Tax, Delhi vs. Convergys India Pvt. Ltd. 2009 (5) TMI 50 - CESTAT, NEW DELHI - Decided in favour of assessee.

Summary

Issues Involved:
1. Rejection of refund claims by the lower appellate authority based on FIRCs mismatch.
2. Revenue's appeal against the sanctioning of refund claims.
3. Interpretation of Notification No. 5/2006 regarding input service credit for exported services.
4. Consideration of revised FIRCs submitted by the appellant.
5. Retrospective amendment of the expression "in" to "for" in the notification.
6. Eligibility of the appellant for the refund based on the retrospective amendment.
7. Consistency in allowing input credit and granting refunds.

Analysis:

1. The appellant filed appeals against the rejection of refund claims totaling &8377; 1,02,94,985/- for the period December 2007 to September 2008. The rejection was primarily due to a mismatch in the FIRCs, where the certificates referred to the export of goods instead of services. The appellant submitted revised FIRCs correcting this error, leading to the claim that the objection no longer stands. The Tribunal remanded the matter to the refund sanctioning authority for reconsideration based on the corrected FIRCs.

2. The Revenue appealed against the sanctioning of refund claims amounting to &8377; 3,01,62,781/- for the period November 2007 to March 2009. The main contention was the interpretation of Notification No. 5/2006, which originally used the term "in" but was later amended to "for." The appellant argued that even before the amendment, circulars clarified the eligibility for refund of input service credit used for exporting services. The Tribunal held that the retrospective amendment and circulars supported the appellant's eligibility for the refund, dismissing the Revenue's appeals.

3. The Tribunal emphasized the significance of the retrospective amendment changing "in" to "for" in the notification, indicating a broader scope for claiming input service credit for exported services. The Tribunal cited legal precedents and the consistency principle in allowing input credit and granting refunds. It highlighted that questioning the eligibility for refund after permitting the credit utilization is not justified. Consequently, the Tribunal dismissed the Revenue's appeals and allowed the appellant's appeals by remand.

4. Given the nature of the refund claims and the retrospective amendment impacting the eligibility criteria, the Tribunal directed the refund sanctioning authority to process the claims promptly within one month from the date of the order. This directive aimed to ensure timely resolution and disbursement of the refund amounts related to the appellant's claims from 2007 onwards.