2015 (11) TMI 1183 - AT - Service Tax

Denial of rebate claim - Export of Output service - Option to export under claim of rebate or without payment of service tax under Export of Service Rules - Business Auxiliary Service - Held that - Export of Service Rules facilitates the service provider with intention to avoid tax burden to be exported. Rule 4 of Service Rule only stipulates that any service which is taxable may be exported without payment of service tax. This cannot be construed as exemption from payment of service tax. The words used exported without payment of duty is different from exempted from service tax . Rule 4 is not exemption from service tax. It is only a provision that where the exporter may export services without payment of duty. Rule 5 of the Export of Services Rules clearly stipulates that where the taxable service is exported, the company can claim rebate of service tax paid on such taxable service by issue of specific notification. Therefore, notification No. 11/2005 was specifically issued for this purpose which clearly says that exporter of service who discharges service tax is allowed to claim rebate under Rule 5 of Export of Services Rules . There is no restriction for exporter that he should avail only Rule 4 and not Rule 5 of Export of Service Rules when there are two options available in the statute / rules, it is the right of the respondent to choose any of the provisions of the rules. Therefore, since in the present case payment of tax on the export of service is not disputed, the respondents are rightly eligible for rebate under Rule 5 of Export of Service Rules. - No infirmity in the impugned order in allowing the rebate of service tax paid on export services under Rule 5 of Export of Service Rules. Accordingly, the impugned order is upheld - Decided against Revenue.

Summary

Issues:
1. Rebate claim under Rule 5 of Export of Service Rules, 2005 read with Notification No. 11/2005.
2. Dispute over payment of service tax on exported Business Auxiliary Service.
3. Failure to produce input documents for claiming rebate.
4. Choice between refund under Rule 5 of CCR and rebate under Rule 5 of Export of Service Rules.

Analysis:
The appellate tribunal heard an appeal filed by the Revenue against an order passed by the Commissioner (Appeals) concerning a rebate claim under Rule 5 of Export of Service Rules, 2005 read with Notification No. 11/2005. The dispute revolved around the payment of service tax on exported Business Auxiliary Service. The Revenue contended that the service exported was exempted from service tax under Rule 4 and that the respondent failed to produce necessary input documents for claiming cenvat credit. On the other hand, the respondent argued that they rendered commission agent services falling under Business Auxiliary Service and paid service tax under reverse charge mechanism, utilizing domestic input services for which they claimed rebate on service tax paid on output services under Rule 5. The Commissioner (Appeals) allowed the appeal, prompting the Revenue to file the present appeal seeking to set aside the earlier order and restore the original order.

The Revenue's main grounds of appeal were the non-production of input documents and the contention that the respondent should have opted for refund under Rule 5 of CCR instead of the rebate route under Rule 5 of Export of Service Rules. The tribunal observed that Rule 4 of Export of Service Rules exempts taxable services exported from payment of service tax, and after reviewing the records and relevant rules, it was established that the respondent had indeed exported Business Auxiliary Service on payment of service tax. The tribunal clarified that Rule 4 does not provide an exemption from service tax but allows for the export of taxable services without payment of duty. Rule 5, on the other hand, enables the claim of rebate on service tax paid on exported taxable services. The tribunal emphasized that when multiple options are available, the choice lies with the taxpayer, and in this case, the respondent was eligible for rebate under Rule 5.

Regarding the issue of non-submission of input service credit documents, the tribunal noted that this was not related to the admissibility of cenvat credit but pertained to the rebate claim on service tax paid on exported services under Rule 5 of Export of Service Rules. The tribunal upheld the lower appellate authority's findings and concluded that since the payment of tax on the export of service was not in dispute, the respondent was rightfully eligible for the rebate under Rule 5. Ultimately, the tribunal found no infirmity in the impugned order, upheld the rebate of service tax paid on export services under Rule 5, and rejected the Revenue's appeal.