2015 (9) TMI 1094 - AT - Service Tax

Denial of refund claim - Appellant had not adhered to the conditions of Notification No. 41/2007-ST - Terminal Handling charges - Held that - It transpires that the refund claims filed by the appellant were in respect of service tax paid on the services received and utilised by them for export of goods during the period October, 2007 to September, 2008. It is undisputed that the services which were received by the appellant were for the purpose of export of the goods and the main services which were received by the appellant were in respect of GTA, Terminal Handling Charges, C&F charges and General Insurance service. We find that the first appellate authority has erred in interpreting the conditions of Notification No.41/2007 dated 06/10/2007 while rejecting the appeal filed by the appellant. - On plain reading of condition (e), it is very clear that the said condition restricts the refund of the service tax paid if an assessee has claimed drawback of service tax paid on specified input service. It is on record, in this case, that the appellant has not filed or claimed drawback of the service tax paid on the specified services. - Rejection of the refund claim of the appellant on this ground is totally incorrect and not sustainable - Decided in favour of assessee.

Summary

Issues:
Refund claims for service tax paid on specified input services for export of goods; Interpretation of Notification No. 41/2007-ST conditions; Eligibility of service tax credit on Terminal Handling charges for refund.

Analysis:
The appellant filed refund claims for service tax paid on input services used for exporting goods from October 2007 to September 2008. The claims were rejected by the adjudicating authority citing non-adherence to Notification No. 41/2007-ST conditions and ineligibility of service tax credit on Terminal Handling charges for refund. The appellant argued that they claimed drawback on customs duty, not service tax, and pointed out a previous case where refund on terminal handling charges was allowed. The Departmental Representative supported the lower authorities' findings.

Upon reviewing the submissions and records, it was found that the services received by the appellant were indeed utilized for exporting goods. The main services included GTA, Terminal Handling Charges, C&F charges, and General Insurance service. The first appellate authority misinterpreted the conditions of Notification No. 41/2007, which led to the rejection of the appeal. The condition (e) of the Notification was crucial, stating that refund is restricted if an assessee claims drawback of service tax paid on specified input service. However, in this case, the appellant did not claim such drawback, making the rejection of the refund claim on this ground incorrect and unsustainable.

Regarding the service tax paid on terminal handling charges, a previous case decision (Stone Shippers) established that such charges are eligible for refund under Notification 41/2007. Therefore, the impugned order was deemed unsustainable, set aside, and the appeal was allowed with any consequential relief.

This detailed analysis clarifies the issues surrounding the refund claims, the interpretation of Notification conditions, and the eligibility of service tax credit on Terminal Handling charges for refund, providing a comprehensive understanding of the judgment.