2016 (1) TMI 847 - AT - Service Tax

Refund of service tax - Eligibility for exemption of Notification No..41/2007-ST, dated 06.10.2007 - Held that - There is no doubt that the service tax was paid on GTA service by the respondent and the goods were transported directly from the factory to the port. In this case, there is a merchant exporter involved, but the merchant exporter cannot claim the refund of service tax that was not paid by him. Seen in the context the provisions of clause 2(b) of the Notification, which has to be read harmoniously with the provisions of clause 2(a), once it is settled that the respondent was eligible for the benefit of exemption Notification No.41/2007-ST the sanction of refund is only the operationalisation of the said exemption. As decided in case of Gee Pee Agri Pvt. Ltd. Vs. CCE 2015 (9) TMI 362 - SUPREME COURT there is some dispute about who is entitled to the refund of service tax, but in any case, the respondents cannot hold the service tax since they are not entitled to do so. The service tax should be refunded to the petitioner within six weeks. - Decided against revenue.

Summary

Issues:
Appeal against Order-in-Appeal allowing refund under Notification No. 41/2007-ST - Eligibility of respondent for exemption - Whether refund should have been filed by the merchant exporter - Interpretation of Notification clauses - Applicability of Supreme Court judgment in Gee Pee Agri Pvt. Ltd. case.

Analysis:
The appeal pertains to a refund allowed to the respondent under Notification No. 41/2007-ST, which the Revenue challenges on the grounds that the refund was filed by the respondent while the exports were made by the merchant exporter. The respondent argues for the admissibility of the refund, citing the Supreme Court judgment in Gee Pee Agri Pvt. Ltd. case. The Tribunal notes that the issue revolves around the eligibility of the respondent for exemption under the said notification. It is observed that the service tax was paid by the respondent on GTA service, and goods were transported directly from the factory to the port. While a merchant exporter is involved, it is clarified that the merchant exporter cannot claim a refund for service tax not paid by them. The Tribunal emphasizes the need to read the provisions of the Notification harmoniously, and once eligibility for exemption is established, the refund is a natural consequence of the exemption.

The Tribunal refers to the Supreme Court judgment in Gee Pee Agri Pvt. Ltd. case, where it was held that the refund of service tax is due either to the petitioner or to the merchant exporter. The Court emphasized that the respondents cannot hold the service tax if they are not entitled to it, and directed the refund to the petitioner. In line with this analysis and legal precedent, the Tribunal finds no merit in the Revenue's appeal and dismisses it accordingly. The decision underscores the principle that the entitlement to a refund of service tax is linked to the party that has fulfilled the conditions for exemption under the relevant notification, and in this case, the respondent meets the criteria for such exemption, warranting the sanction of the refund.