2015 (9) TMI 783 - AT - Service Tax

Refund - Export of services - re-classification of services - engineering consultancy services, business auxiliary services, repair and maintenance services and renting of immovable property services were provided to foreign clients - Scope of Rule 5 of Export of Services Rules, 2005 read with notification No. 11/05-ST dated 19-4-2005 - Held that - Once the Service Tax has been collected by the department from the appellants by treating their services as business auxiliary service at the time of considering the claim for rebate of the Service Tax so paid, the department cannot question the classification of the services. Therefore, the denial of rebate on the ground that in absence of service agreements, the nature and classification of services provided by the appellants, is not ascertainable, is not sustainable. However, for quantification of export rebate, the matter would have to be remanded, as the rebate would be admissible only of the Service Tax paid on the amount received by the Appellants for Services provided by them to their foreign clients. - Decided in favor of assessee. Period of limitation for claiming refund / rebate - Held that - In case of export of Service, the services provider is in India and the services receiver is outside India. Therefore, in our view, a service transaction would be complete in case of export of service, when the service has been provided to the off-shore client and the payment for the service has been received and accordingly, the date on which the payment has been received has to be treated as the relevant date for the purpose of counting limitation period. Moreover, the terms of Rule 3(2) of the Export of Services Rules, 2005, the provision of Services specified in Rule 3(1) shall be treated as export only when payment for such services has been received by the service provider in convertible foreign exchange and on this basis also, a transaction of service export is to be treated as complete only when the service has been provided and payment for the same has been received in convertible foreign exchange. - Decided in favor of assessee.

Summary

Issues:
Rebate claims rejection on the ground of lack of service agreements and time bar.

Analysis:
The appellants provided consultancy and advisory services to foreign clients, paying Service Tax on these transactions. They filed rebate claims under Export of Services Rules, 2005, which were rejected by the Deputy Commissioner citing absence of service agreements and being time-barred. The Commissioner (Appeals) upheld the rejections, leading to the filing of five appeals.

The appellants argued that the services provided were business auxiliary services, constituting export of services under the Rules. They contended that since the department accepted the Service Tax payments under this classification, the rebate claims should not be denied based on missing service agreements. They also challenged the time-barred rejections, asserting that no limitation period applies to rebate claims for export of services.

The Department defended the rejections, emphasizing the unknown nature of services due to missing agreements and the timely filing requirement under Section 11B of the Central Excise Act, 1944. They argued that the impugned orders were valid and should be upheld.

The Tribunal found that the appellants' services were business auxiliary services exported to foreign clients, as declared in their ST 3 returns. It held that once the department accepted the Service Tax under this classification, questioning it for rebate claims was unjustified. Regarding the limitation period, the Tribunal applied Section 11B to Service Tax matters, defining the "relevant date" for export of services as the receipt of payment in convertible foreign exchange. It referenced a similar case to support this interpretation.

While two appeals were rejected due to being time-barred, the other three were remanded for quantification of export rebate. The Tribunal set aside the impugned orders and directed the adjudicating authority to determine the rebate amount based on the provided services to foreign clients.

In conclusion, the Tribunal upheld the rejection of two appeals as time-barred but remanded three appeals for further assessment of export rebate, emphasizing the importance of service classification and relevant date for rebate claims under the Export of Services Rules, 2005.