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2015 (10) TMI 2213 - AT - Service TaxDenial of refund claim - Bar of limitation - Whether respondents were eligible to refund @2% of FOB value on Commission Agent Service or 10% of FOB value as a result of amending Notification No. 33/2008-ST dated 07/12/2008, carried out in Notification No. 41/2007-ST dated 06/10/2007 - Held that - As per Notification No. 41/2007-ST dated 06/10/2007 before its amendment, a refund equivalent to 2% of FOB value of the commission was admissible. As a result of amendment to Notification No. 41/2007-ST, as a result of Notification No. 33/2008-ST, made the refund admissible @ 10% from 2% admissible earlier. Commissioner (Appeals) has held that amendment in the rate of refund admissible w.e.f. 07/12/2008 will have retrospective on the analogy of CBEC File No. 137/84/2008-CX dated 12/03/2009 CBEC where it has been clarified that the benefit of amendment made in Notification No. 41/2007-ST, regarding extending of time limit for filing refund claim, can be given retrospectively. It has thus been held by the First Appellate Authority that if one amendment to Notification No. 41/2007-ST can be given retrospective effect then admissibility of refund @ 10% by an amendment with effect from 07/12/2008, should also be given retrospective effect. - as any amendment to a notification will have only prospective effect unless specifically made retrospective by the appropriate authority. No notification can be given retrospective by an executive instruction. - Decided in favour of Revenue.
Issues:
1. Interpretation of CBEC Circular regarding refund claim time bar. 2. Eligibility for refund @2% or 10% of FOB value on Commission Agent Service. 3. Retroactive effect of amending Notification No. 33/2008-ST. Interpretation of CBEC Circular: The case involved an appeal by the Revenue against two orders dated 06/07/2009 and 08/06/2009. The First Appellate Authority had ruled that a refund claim cannot be rejected as time-barred based on CBEC Circular No. 137/84/2008 CX dated 12/03/2009. The Revenue argued that the Circular was wrongly applied to the refund of service tax paid on commissions. The ARs contended that an amendment to Notification No. 33/2008-ST could not have retrospective effect, contrary to the First Appellate Authority's interpretation. The Tribunal noted that no one appeared for the respondent, and after hearing the arguments, it was concluded that executive instructions cannot make a notification retrospective. Consequently, the appeal was allowed, and the First Appellate Authority's order was set aside. Eligibility for Refund on Commission Agent Service: The main issue was whether the respondents were entitled to a refund at the rate of 2% of FOB value on Commission Agent Service or 10% of FOB value due to an amendment in Notification No. 33/2008-ST. Before the amendment, a refund equivalent to 2% of FOB value was permissible. However, the amendment increased the refund to 10%. The Commissioner (Appeals) had held that the amendment should have a retrospective effect, citing a CBEC Circular. In contrast, the Tribunal held that amendments to notifications generally have prospective effects unless specifically made retrospective by the appropriate authority. The Tribunal disagreed with the Commissioner's interpretation and allowed the Revenue's appeal, setting aside the First Appellate Authority's decision. Retroactive Effect of Amending Notification: The Tribunal deliberated on whether the amendment to Notification No. 33/2008-ST, which increased the refund rate from 2% to 10%, should have retrospective application from 07/12/2008. The First Appellate Authority had justified a retrospective effect based on a CBEC Circular regarding another notification. However, the Tribunal emphasized that notifications can only have prospective effects unless explicitly stated otherwise. The Tribunal held that executive instructions cannot confer retrospective status on a notification. Consequently, the appeal by the Revenue was allowed, overturning the decision of the First Appellate Authority.
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