2019 (9) TMI 1391 - AT - Service Tax

Refund of service tax - export of services - rejection on the ground time limitation - case is that the application for seeking refund is of 4th January, 2007, hence, this amount is beyond the requisite period of one year from the date of payment of service tax - HELD THAT - The period of one year for the impugned application shall be w.e.f December 2005 to December2006. The period of claim herein is w.e.f July, 2005 to November, 2006. Hence, the claim which is beyond one year of the date of application for refund is for the period w.e.f. July, 2005 to November, 2005 which comes to ₹ 1,72,125/-. It is observed that while adjudicating the said show-cause notice the original adjudicating authority has in addition to rejecting the claim of ₹ 1,72,125/- has rejected the entire claim not only ₹ 6,89,015/- for the remaining period from December, 2005 to November, 2006, it has also rejected the claim of ₹ 2,17,081/- for the period December, 2006 to February, 2007 as was not even file on 4th January, 2007 but on 18th December, 2007. Thus, the adjudicating authority has committed an error while holding the entire amount of claim i.e. ₹ 6,89,015/- as filed beyond one year. Apparently, the claim for an amount of ₹ 1,72,125/- for the period July, 2005 to November, 2005 is beyond one year from 04.01.2017 the date of filing of the said refund claim. The period of limitation applicable is whether one year of two years? - HELD THAT - The provision of section 11B of CEA specifies that the application for seeking such refund can be made to the Assistant Commissioner before expiry of one year from the relevant date. Second proviso to this section makes it clear that this limitation of one year shall not apply only to the case where such duty/tax and interest has been paid under protest - once the notification is silent about any time limit and the notification is flowing from the statute having the above provision, the limitation of one year as mentioned in the above provision shall be applicable to the said notification. For the application as the one in question, since it is maintainable under Section 11-B of Central Excise Act, irrespective out of the benefit flowing from the notification No. 11/2005 dated 19.04.200, the period of one year from the relevant date shall be applicable to claim the refund of the tax paid qua export of service. In the present case apparently and admittedly, the application to claim refund was filed on 4th January, 200, the relevant date. Hence, the claim w.e.f January, 2006 cannot be held to be barred by time. Accordingly, it is the claim only for the period prior January, 2006 i.e. of ₹ 1,72,125/- out of ₹ 6,89,015/- for the period of July, 2005 to December, 2005 which is beyond one year of the impugned application. Hence, the order-under-challenge to the extent of denying the refund of ₹ 1,72,125/- is sustainable. Denial of refund of ₹ 2,17,081/- for the period December, 2006 to February, 2007 - HELD THAT - It is an admitted fact that the appellant was issued only one show cause notice i.e. of 10.04.2008 with only one objection i.e. denial of refund of ₹ 1,72,125/- (as was filed on 18.12.2007) also absolutely beyond the scope of show cause notice. The para-2 of the show cause notice as quoted in previous para of this order is again relied upon for the purpose. It becomes clear that demand of ₹ 2,17,081/- is absolutely beyond the scope of SCN, hence the confirmation is also not sustainable is liable to be set aside. Export of services or not - HELD THAT - Even the original adjudicating authority, after considering the invoices tendered by the appellant in respect of the services and agreements/contracts entered into by them with the foreign clients, has itself concluded that the services as provided by the appellants are the taxable services for the purposes Rule 3 of Export of Service Rules, 2005 is relevant. Appeal allowed in part.

Summary

Issues:
1. Time limitation for filing refund claim under Rule 5 of Export of Services Rules, 2005.
2. Whether services provided by the appellant amount to export of service.
3. Applicability of Section 11B of the Central Excise Act, 1944 to the refund claim.

Issue 1: Time limitation for filing refund claim under Rule 5 of Export of Services Rules, 2005:
The appellant filed a refund claim for services provided from July 2005 to November 2006, seeking a refund of &8377; 6,89,015. The claim was rejected as being beyond the one-year period. The Tribunal observed that the claim for &8377; 1,72,125 for the period July 2005 to November 2005 was indeed time-barred. However, the rejection of the entire claim, including amounts for subsequent periods, was found to be erroneous. The Tribunal held that the limitation period of one year from the relevant date applies to the claim for refund of tax paid concerning the export of service.

Issue 2: Whether services provided by the appellant amount to export of service:
The Tribunal analyzed the provisions of Rule 3 of Export of Service Rules, 2005, which specify conditions for services to be treated as export of service. It was established that services provided to clients outside India, even if the recipient has establishments in India, qualify as export of service. The appellant's services were deemed to fall under this category, making them eligible for the refund claimed, provided it was within the applicable time limit.

Issue 3: Applicability of Section 11B of the Central Excise Act, 1944 to the refund claim:
The Tribunal considered the interplay between the notification under the Finance Act, 1994, and the Central Excise Act, 1944, regarding the time limit for refund claims. While the notification did not specify a time limit, the Tribunal held that the limitation period of one year from the relevant date, as per Section 11B of the Central Excise Act, applies to such claims. The Tribunal also noted that the appellant's subsequent claim application was beyond the scope of the show-cause notice, leading to the rejection of that specific claim amount.

In conclusion, the Tribunal partially upheld the order-under-challenge, denying the refund of &8377; 1,72,125 as it was time-barred. However, the denial of the refund for subsequent periods was set aside, as the services provided qualified as export of service. The Tribunal emphasized the importance of adhering to the specified time limits for refund claims under the relevant statutory provisions.