2019 (6) TMI 1599 - AT - Service Tax

Refund of CENVAT Credit - export of services - SCN not issued - POPOS Rules - whether the Commissioner is justified in remanding the matter back to the Adjudicating Authority for determination of the question of export of service under the provisions of place of provisions of service rules 2012 ? - HELD THAT - This Tribunal has repeatedly held that without issuing a show cause notice of the intended disallowance of a claim, the same cannot be done legally as the issue of valid show cause notice is a sine quo non for assuming jurisdiction, to pass an adjudication order. In the facts of the present case, it is an admitted fact that the appellant has been engaged in similar activities, wherein they provide credit report on worthiness of the buyer of the product manufactured by the seller /principal, who are located outside India. The appellant has also brought on record several adjudication orders for the period July, 2014 to March, 2016, wherein under the similar facts and circumstances, cenvat credit has been refunded and the status of export of service is accepted by the Department, which has not been further carried in appeal by the Department. The order of remand by the Commissioner (Appeals) for re-determination of the issue whether the appellant has exported their services is without any merit - Adjudicating Authority is directed to grant the refund within a period 45 days from the date of receipt of the order along with interest as per rules - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant's claim of export of services, filed along with a refund claim under Cenvat Credit Rules, can be denied without issuing a show cause notice.
2. Whether the Commissioner was justified in remanding the matter back to the Adjudicating Authority to determine the export of service under the 'place of provisions of service rules 2012'.

Analysis:

Issue 1:
The appellant filed a refund claim under Rule 5 of Cenvat Credit Rules for services provided to overseas clients, treating them as exports. The Adjudicating Authority sanctioned the refund, but the Revenue appealed, arguing that the export of services should be determined under the Export of Services Rules. The Appellate Authority directed the Adjudicating Authority to determine the export status. The appellant contended that they had a bona fide belief in the export status since 1995 and had consistently declared such exports in their returns. They argued that the Revenue's failure to raise doubts on taxability in the past precludes them from disputing it now. The appellant cited judicial precedents to support their claim that refund authorities cannot dispute the taxability of transactions in refund proceedings. The Tribunal held that without a show cause notice, disallowing the claim is legally impermissible. The Tribunal noted past refund orders in favor of the appellant and concluded that the remand order by the Commissioner lacked merit. The appeal was allowed, directing the refund to be granted within 45 days with interest.

Issue 2:
The Commissioner remanded the matter to determine whether the appellant's services qualified as exports under the 'place of provisions of service rules 2012'. The Tribunal found that the appellant's activities were similar to past cases where export status was accepted, refunds were granted, and not challenged further. The Tribunal held that the Commissioner's remand order lacked merit as the appellant's case was consistent with earlier orders. The impugned order-in-appeal was set aside, allowing the appeal with consequential benefits. The Adjudicating Authority was directed to grant the refund within 45 days with interest.