2018 (4) TMI 1659 - CGOVT - Service Tax

Rebate of service tax - export of services - rejection on the ground that the applicant did not file a declaration under Para 3.1 of Notification No. 12/2005-S.T., dated 19-4-2005 prior to export of services - whether the rebate of service tax can be denied to the applicant for non-filing of declaration with the jurisdictional Assistant/Deputy Commissioner prior to export of taxable service? - Held that - From the facts, it is evident that earlier the jurisdictional authorities themselves did not consider prior filing of the declaration as mandatory and by sanctioning all earlier claims the respondent was given a belief that the declaration could be filed even subsequently. Therefore, for non-filing the declaration prior to export of service, the respondent cannot be blamed entirely. Moreover, the objective of Notification No. 12/2005-S.T. and overall Government policy of granting various export incentives is to grant rebate of taxes and not to deny the same on technical and procedural reasons such as non-filing of declaration prior to export of service. The Notification No. 12/2005-S.T. has been divided into two parts whereby the conditions and limitations, which are essentially to be fulfilled, are stipulated in Para 2 and the procedural part relating to operation of the notification is covered under Para 3 of the said notification. Filing of declaration prior to date of export of taxable service is treated part of procedure under the notification itself and its obvious purpose is that while declaration should facilitate the departmental authorities for smooth implementation of the above notification, it should not be equated with the essential conditions and limitations specified in Para 2 for denial of rebate of tax. Even otherwise also it is rightly observed by Commissioner (Appeals) that it is not always possible for the exporters to give advance information such as quantity and value of the inputs and input services, etc., which are to be provided in the declaration by the exporter prior to the date of export of the service and it can be given on estimated basis only prior to export of service which is not of much use. Since the respondent s rebate claim involved in the present proceeding was also filed in respect of the same inputs/input services and the jurisdictional authorities have not pointed out any irregularity with regard to maintainability of the rebate claim, the Revenue does not have any legitimate basis for denying the rebate claim merely on the basis of non-filing of declaration prior to export. The Government does not find any fault in the order of the Commissioner (Appeals) - Revision Application is rejected.

Summary

Issues:
1. Rebate claim of service tax denied for non-filing of declaration prior to export of services.

Analysis:
The case involved a Revision Application filed against an Order-in-Appeal where the respondent's rebate claims of service tax were rejected due to non-filing of a declaration under Notification No. 12/2005-S.T. before exporting services. The respondent argued that non-filing was a procedural error, as they had filed declarations post-export before, and the rebate had been granted without issue. The Commissioner (Appeals) agreed with the respondent, stating that rebate claims should not be refused solely for non-filing of the declaration before export. The applicant contended that non-filing deprived the authority of verifying the declaration's accuracy, leading to the Revision Application.

The main issue was whether the rebate of service tax could be denied for not filing the declaration before export. While the respondent did not file the declaration before export, it was acknowledged that taxable services were exported using various tax-paid input services. The jurisdictional authorities were aware of the export activities, verified input services in past rebate claims, and sanctioned them despite declarations being filed post-export. The authorities advised prior filing of declarations on an estimated basis in 2011, and the respondent complied regularly. The Government noted that the declaration filing was a procedural requirement under Para 3 of Notification No. 12/2005-S.T., distinct from the essential conditions in Para 2. The purpose was to aid smooth implementation without equating it to essential conditions. The Commissioner (Appeals) rightly observed that exporters might not always provide accurate information in advance, and the subsequent filing of declarations with rebate claims contained all necessary details without fault. Previous declarations were approved, implying acceptance of inputs and services. As the current rebate claim involved the same inputs/services without irregularities, the Revenue lacked a legitimate basis to deny the claim based solely on non-filing of the declaration before export. The Government upheld the Commissioner (Appeals) order, rejecting the Revision Application.