2016 (11) TMI 704 - AT - Service Tax

Denial of refund of service tax - terminal handling charges - export of goods - N/N. 41/2007-ST - whether the denial of refund on the ground that no evidence of payment of service tax by the service provider to the Government is justifiable? - Held that - the appellant s eligibility to refund under Notification No. 41/2007-ST for service tax paid towards terminal handling charges availed during the course of exports, inside the port area, has been settled by various decisions of the Tribunal and High Courts - reliance placed on the decision of the case of SRF Limited 2015 (9) TMI 1281 - CESTAT NEW DELHI where it was held that the service tax on terminal handling charges was rightly covered under N/N. 41/2007-ST - denial of refund claim not justified - appeal allowed.

Summary

Issues:
Denial of refund of service tax paid on terminal handling charges during export.

Analysis:
The judgment dealt with six appeals concerning the denial of a refund of service tax paid on terminal handling charges during the export of goods. The appellant argued that they had paid the service tax to the service provider for services availed during the export process inside the port. The denial of the refund based on the lack of evidence of service tax payment to the government by the service provider was deemed unjustifiable. It was established that service tax on terminal handling charges was covered under Notification No. 41/2007-ST, as per precedents like the decisions in SRF Limited and Shiv Exports & Others.

The eligibility for a refund under Notification No. 41/2007-ST for service tax paid on terminal handling charges during exports within the port area had been settled by various Tribunal and High Court decisions. The Tribunal referred to the case of M/s Shivam Exports, emphasizing that exporters must demonstrate payment of service tax to service providers, which can be inferred from invoices containing the service tax element. Various charges related to port services were considered admissible for refund under the notification. The judgment highlighted that procedural aspects should not be a reason for rejecting refund claims and emphasized the importance of essential details in documents like debit notes for refund approval.

Furthermore, the Tribunal cited the case of M/s Nahar Fibres vs. CCE, Chandigarh, which clarified that services provided in relation to port services to an exporter and used for export were exempt from service tax under Notification No. 41/2007-ST. The Tribunal criticized the erroneous interpretation by the adjudicating authority that terminal handling charges within the port did not fall under port services, contrary to the notification's provisions. Another case, M/s Suncity Art Exporters & Ors., confirmed the admissibility of refund for various charges like THC Charges, REPO Charges, BL charges, DDC Charges, and hollage charges as they were considered part of port services.

Based on the established legal position, the Tribunal found no merit in the orders denying the refund and set them aside, allowing the appeals in favor of the appellant.