2021 (12) TMI 1436 - CGOVT - Service Tax

Rejection of rebate claim - rejection on the grounds that the Applicants had not filed prior declaration in terms of para 3.1 of the notification dated 20.06.2012 - revision application claims that delay in filing of prior declaration is at best a procedural delay and accordingly rebate should not be denied - HELD THAT - In terms of rule 6A the rebate of service tax paid on providing services that are exported shall be allowed subject to such safeguards conditions and limitations as may be specified. Further on a plain reading the provisions of para-3.1 of the notification no. 39/2012-ST relating to filing a prior declaration i.e. a declaration prior to the date of export of service read with para- 3.2 are in the nature of Safeguards in as much as filing of the prior declaration enables the department to cause necessary verification so as to satisfy itself that there is no likelihood of evasion of duty service tax and cess as the case may be - In the present case therefore by not filing the prior declaration the Applicant has circumvented the safeguards subject to which the rebate is to be allowed in terms of rule 6A. As the sanction of rebate is subject to observance of the safeguards in para 3.1 and as in the present case these safeguards have not been observed the rebate is not admissible. The Hon ble Supreme Court in the case of GOVERNMENT OF KERALA ANR. VERSUS MOTHER SUPERIOR ADORATION CONVENT 2021 (3) TMI 93 - SUPREME COURT has after noting the judgment in COMMISSIONER OF CUSTOMS (IMPORT) MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT clarified that in case any ambiguity arises in construction of a beneficial exemption the benefit of such ambiguity should be granted in favour of what is exempted - In the present case there is no ambiguity whatsoever regarding the provisions of para 3.1. Therefore the judgment in Mother Superior case is of no assistance to the Applicants herein. The Applicants are clearly in default of the safeguards specified under notification no. 39/2012-ST and have failed to discharge the burden of proving applicability as required in terms of Dilip Kumar Company. The revision application is rejected.

Summary

Issues:
1. Rebate claims rejection based on non-filing of prior declaration.
2. Interpretation of rule 6A of Service Tax Rules, 1994 and notification no. 39/2012-ST.
3. Comparison of provisions of rule 5 of Export of Service Rules, 2005 with rule 6A.
4. Application of legal precedents - Wipro Limited case and Mother Superior case.
5. Analysis of judgments - Commissioner of Customs (Import), Mumbai Vs Dilip Kumar & Company and Mother Superior Adoration Convent cases.

Detailed Analysis:
1. The issue in this case revolves around the rejection of rebate claims by M/s. Genpact Services LLC due to their failure to file a prior declaration as required by para 3.1 of notification no. 39/2012-ST. The original authority rejected the claims citing non-compliance with the declaration requirement, leading to the appeal filed by the Applicants, which was subsequently rejected by the Commissioner (Appeals).

2. The central question involves the interpretation of rule 6A of Service Tax Rules, 1994 and notification no. 39/2012-ST. The rule allows for rebate of service tax paid on exported services subject to specified safeguards, conditions, and limitations. The notification mandates filing a declaration prior to the export of services, serving as a safeguard to prevent evasion of duty or service tax.

3. A comparison is drawn between the provisions of rule 5 of Export of Service Rules, 2005 and rule 6A of Service Tax Rules. While rule 5 imposes conditions or limitations for rebate eligibility, rule 6A adds the requirement of safeguards in addition to conditions and limitations. This distinction is crucial in determining the admissibility of rebate claims.

4. Legal precedents such as the Wipro Limited case and Mother Superior case are invoked in the argument. The Applicants rely on the Wipro Limited case to support their position, but the Government distinguishes the case by highlighting the nature of services provided and the specific requirements of the notification in question. The Mother Superior case is also analyzed, emphasizing the need to interpret exemption provisions strictly and in favor of revenue in case of ambiguity.

5. The application of legal precedents, specifically the judgments in Commissioner of Customs (Import), Mumbai Vs Dilip Kumar & Company and Mother Superior Adoration Convent cases, is crucial in determining the outcome of the revision application. The Government rejects the application based on the failure to comply with the safeguards specified in the notification, thereby upholding the rejection of rebate claims by the lower authorities. The other case laws cited are deemed irrelevant in light of the specific facts and legal discussions presented in this case.