2019 (3) TMI 1880 - HC - Service Tax

Refund claim - refund claimed on the ground that service rendered was outside the shores of India and to a foreign party - HELD THAT - This Court notes that under Article 227 of the Constitution of India, the Court is empowered to look into the actual state of affairs and lis between the parties and can always mould reliefs in the interest of both the assessee as well as the Department. Hence, the applications have been taken up for hearing analogously - this Court is of the view that the matter ought to be remanded back for consideration afresh before the Customs, Excise and Service Tax Appellate Tribunal, Kolkata as regards why the case of the revisionist should not be viewed as similarly placed to the applicant to the decision of the Mumbai Bench of the Tribunal in the case of SUN-AREA REAL ESTATE PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I 2015 (5) TMI 885 - CESTAT MUMBAI where it was held that when a foreign bank is maintaining Indian rupees in their account obviously, such Indian rupees was obtained in lieu of foreign exchange. Matter remanded.

Summary

Issues:
1. Revisionist aggrieved by the refusal to rectify an order by the Member (Judicial) in a Misc. Application.
2. Claim for refund of service tax paid by a wholly owned subsidiary to a foreign party.
3. Tribunal's refusal to interfere with the order declining the refund.
4. Interpretation of Foreign Exchange Management Act, 1999 in the context of remittance received in rupees.
5. Failure of the Tribunal to address the cited judgment appropriately.
6. Technical issue raised regarding the maintainability of the revisional applications.

Analysis:
1. The revisionist was aggrieved by the refusal of the Member (Judicial) to rectify an order dated 16th February, 2017 passed by the Customs, Excise and Service Tax Appellate Tribunal, East Zonal Bench at Kolkata. The revisionist claimed to be affected by an order dated 29th May, 2017, which declined to rectify the previous order.

2. The revisionist, a wholly owned subsidiary of a foreign registered company, provided services to a Japanese company and received payment in Foreign Exchange, albeit in rupees. The service tax paid on this transaction was sought as a refund since the service was provided outside India to a foreign party.

3. Despite the revisionist's claim for a refund, the Assessing Authorities and the Commissioner of Appeals declined the request. The Tribunal also refused to interfere with this decision, leading to the revisionist's grievance.

4. The rejection of the revisionist's refund claim was primarily based on the argument that the remittance received in rupees could not be considered a Foreign Inward Remittance. The interpretation of the Foreign Exchange Management Act, 1999 was crucial in determining whether the remittance qualified as Foreign Exchange.

5. The Tribunal's failure to adequately address the cited judgment of Sun-Area Real Estate Private Limited in a similar context raised concerns. The judgment highlighted that a remittance received in rupees could still constitute Foreign Exchange under the Act, which the Tribunal did not seem to consider appropriately.

6. A technical issue was raised regarding the maintainability of the revisional applications, as the orders of the First Authority, the Appellate Authority, and the Tribunal were not specifically challenged. However, the Court, empowered under Article 227 of the Constitution of India, decided to hear the applications analogously to ensure a fair consideration of the matter.

In conclusion, the Court remanded the matter back to the Customs, Excise and Service Tax Appellate Tribunal, Kolkata for a fresh consideration. The Court emphasized the need to evaluate why the revisionist's case should not be viewed similarly to the precedent set by the Mumbai Bench of the Tribunal. The revisional applications were disposed of with no order as to costs, and parties were to receive certified copies of the order upon compliance with formalities.