2016 (11) TMI 1350 - AT - Service Tax

Refund claim - N/N. 41/2012 ST - export of services - GTA services - Held that - The Notification No. 41/2012-ST has been issued in terms of Section 93A of the Finance Act, 1994. The notification provides for grant of rebate by way of refund of the service tax paid on the specified services used for export of goods. It is nobody s case that the GTA services for which the appellant has claimed rebate of service tax under the notification has not been used for export of goods. Consequently, there is no doubt that the appellant falls within the gamut of the notification whose stated purpose is to grant refund of service tax on services used for export. It is not in dispute that the service tax was paid by the appellant and such services have been used for export of the goods by the appellant. Consequently, I am of the view that rebate under Notification No. 41/2012-ST is required to be paid to the appellants - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Claim of rebates under Notification No. 41/2012-ST for service tax paid on Goods Transportation Agency (GTA) services used for export of goods.

Analysis:
The appeal was against the rejection of rebate claims under Notification No. 41/2012-ST for service tax paid on GTA services used for transporting export goods. The appellant, a Government of India PSU, paid service tax under reverse charge mechanism and claimed rebates, which were denied by the authorities citing clause 3(b) of the notification. The appellant argued that a strict interpretation of the clause would defeat the purpose of the notification intended for exporters using taxable services for exports. They relied on Supreme Court decisions emphasizing liberal interpretation of notifications for applicability and strict construction for clauses. The appellant also highlighted clause 2(e) of the same notification, which does not impose a similar condition as clause 3(b, and requested consideration under this clause as an alternative. The appellant stressed that the rebate should be granted considering the purpose and object of the notification.

The Revenue, however, supported the authorities' findings, stating that notifications must be strictly interpreted. They reiterated that since the appellant paid service tax for GTA services under reverse charge, rebate could not be sanctioned as per clause 3(b). The dispute revolved around the interpretation of clause 3(b) disentitling persons liable to pay service tax under section 68 for taxable services provided to exporters from claiming rebates. The appellant, as the recipient of GTA services, was deemed liable to pay service tax, leading to the rejection of rebate claims based on this clause.

The Tribunal analyzed the notification and relevant legal principles, emphasizing that the appellant's use of GTA services for exporting goods aligned with the notification's objective of granting refunds for services used in exports. Referring to Supreme Court decisions, the Tribunal highlighted the need to interpret notifications to achieve their purpose once applicability is established. Upholding a literal interpretation of clause 3(b) would defeat the notification's purpose and deny refunds to exporters who paid service tax under reverse charge. The Tribunal concluded that the rebate under Notification No. 41/2012-ST should be granted to the appellant, setting aside the impugned order and providing consequential relief.

In conclusion, the Tribunal's judgment focused on reconciling the strict interpretation of notification clauses with the overarching objective of facilitating rebates for service tax paid on services used for exports. The decision underscored the importance of aligning legal interpretations with the intended purpose of statutory notifications to ensure fair treatment for taxpayers while upholding legal principles.