2016 (6) TMI 76 - AT - Service Tax

Entitlement for rebate claim - Notification No. 11/2005-ST dated 19/04/2005 - facilitating sale of coal for a UAE based company and for such arranging a client in Singapore - category of service rendered is not clear - no taxable service rendered in the taxable territory of India - services, if any rendered were consumed by company in UAE - Held that - the tax paid by the appellant is apparently not attributable to any taxable activity as held in the impugned order. If that be so, irrespective of the manner of claim by the appellant, they are entitled for return of money. This aspect requires a fresh consideration by the Original Authority who after giving adequate opportunity to the appellant will decide the case afresh on the eligibility of the appellant for return of their amount paid to the Government in view of the finding of the first Appellate Authority. At this juncture, learned Counsel for the appellant pleaded for a direction on appropriate interest to be paid for the delayed refund. The refund in consequence of this direction shall also be considered for payment of interest as per the applicable law. - Appeal allowed by way of remand

Summary

Issues involved:
1. Eligibility for service tax refund under Notification No. 11/2005-ST.
2. Applicability of Export of Service Rules, 2005.
3. Jurisdiction of the service tax authorities.
4. Entitlement to interest on delayed refund.

Eligibility for service tax refund under Notification No. 11/2005-ST:
The appellant, engaged in facilitating coal sales for a UAE company, mistakenly paid service tax and filed a rebate claim under Notification No. 11/2005-ST. The Original Authority rejected the claim citing unclear service category and failure to establish foreign currency receipt. On appeal, the Commissioner (Appeals) ruled that services performed in Singapore are not taxable under the Finance Act 1994, thus Export of Service Rules, 2005, do not apply. The appellant argued for a refund, asserting non-taxable services and service export to UAE. The Tribunal noted no taxable service in India and directed the Original Authority to reassess refund eligibility based on the appellate finding.

Applicability of Export of Service Rules, 2005:
The Commissioner (Appeals) clarified that services provided in Singapore are not taxable under Indian service tax laws, eliminating the need for Export of Service Rules, 2005. The appellant contended that their services were not taxable and were exported to UAE, seeking a refund. The Tribunal concurred, emphasizing no taxable service in India and consumption of services in UAE, leading to the conclusion that the appellant is entitled to a refund.

Jurisdiction of the service tax authorities:
The Tribunal observed that the Original Authority rejected the refund claim on various grounds, while the Commissioner (Appeals) found the services non-taxable but did not grant the refund due to Export of Service Rules, 2005. With no appeal from the Revenue against the appellate order, the Tribunal highlighted the absence of taxable activity in India and directed the Original Authority to reevaluate the refund eligibility in light of the appellate decision.

Entitlement to interest on delayed refund:
The appellant requested appropriate interest on the delayed refund. The Tribunal directed the Original Authority to reconsider the refund eligibility and instructed that any refund granted should include applicable interest as per the law. The Tribunal's decision implied that the appellant should receive interest on the delayed refund amount.

This detailed analysis of the judgment addresses the issues of service tax refund eligibility, the application of Export of Service Rules, jurisdiction of tax authorities, and entitlement to interest on delayed refunds, providing a comprehensive overview of the legal proceedings and the Tribunal's decision.