2016 (4) TMI 25 - AT - Service Tax

Refund of Service tax - paid on specified services in terms of the provisions of Notification No.41/2007-ST 6.10.2007 - Non-fulfillment of condition contained in proviso (e) to para (1) of Notification that the goods exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise and Service Tax Drawback Rules, 1995- Held that - the appellant s contention that deletion of the condition (e) with effect from 7.12.2008 should be considered as retrospective cannot be accepted. Condition (e) is admittedly part and parcel of the Notification and the benefit of the Notification is dependent on the fulfillment of a particular condition enumerated therein. The said condition was part of the above Notification, during the relevant period and it was incumbent upon the assesee to fulfill the same for the purpose of availment of the benefit of the Notification. The deletion of the said condition of the Notification subsequently cannot be considered to be clarificatory in nature so as to hold the same to be effective with retrospective effect. Deletion of the condition of the Notification is only reflective upon the legislative intent and would be effective only from the date of its actual deletion. Therefore, refund cannot be allowed. - Decided against the assessee

Summary

Issues:
1. Refunds of service tax paid on specified services under Notification No.41/2007-ST.
2. Interpretation of condition (e) of the Notification regarding drawback of service tax.
3. Effect of deletion of condition (e) with retrospective application.

Analysis:

Issue 1: Refunds of service tax paid on specified services under Notification No.41/2007-ST

The appeals revolve around the dispute concerning refunds of service tax paid on specified services under Notification No.41/2007-ST, related to the export of goods. The appellants have exported goods under claim of drawback, leading to the rejection of refund claims based on non-fulfillment of conditions specified in the Notification.

Issue 2: Interpretation of condition (e) of the Notification regarding drawback of service tax

The key contention arises from condition (e) of the Notification, which requires that goods must be exported without availing drawback of service tax paid on specified services. The appellants argued that the rate of drawback, as finalized by the government, did not include certain charges specified in the Notification, thus implying no drawback claim for those services. However, the Revenue contended that the drawback already included the value of specified services, making the condition unfulfilled due to export under drawback.

Issue 3: Effect of deletion of condition (e) with retrospective application

Regarding the deletion of condition (e) from the Notification with effect from 7.12.2008, the appellants sought retrospective application, which was opposed by the Revenue. The Tribunal emphasized that the deletion could not be retroactive as the condition was integral to the Notification during the relevant period, and compliance was necessary for availing benefits. The deletion did not alter the past application of the condition.

The Tribunal, after considering arguments from both sides and examining the Notification provisions, concluded that the appellants' claims for refund of service tax were rightly rejected. The Tribunal referenced previous decisions to support its ruling, emphasizing that when duty drawback is claimed on exported goods, refunds under the Notification are not admissible. Additionally, the Tribunal clarified that the deletion of condition (e) did not have retrospective effect, as it was a substantive part of the Notification and its removal only reflected legislative intent from the date of deletion. Consequently, the appeals were dismissed for lack of merit.