2017 (6) TMI 766 - AT - Service Tax

Reverse charge mechanism - benefit of N/N. 18/2009-ST dated 07.07.2009 - denial on the ground that during the period 2012-2013 although the appellant has filed EXP-1 for the period 2012-13 but the EXP-2 has not been filed - Held that - similar issue decided in the case of Malwa Industries Ltd. 2009 (2) TMI 41 - SUPREME COURT , wherein the Hon ble Apex Court held that the substantial benefit of notification cannot be denied for merely procedural lapse - the appellant is entitled for benefit of N/N. 18/2009-ST dated 07.07.2009 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against confirmed demand by denying the benefit of Notification No.18/2009-ST dated 07.07.2009 due to non-compliance with filing EXP-2, Applicability of reverse charge mechanism for service tax, Denial of exemption notification benefit for procedural lapse in filing EXP-1 and EXP-2, Entitlement to claim refund of service tax paid, Justification for setting aside the impugned order.

Analysis:

The appellant, an exporter of goods, availed services of a commission agent located overseas but failed to file EXP-2 to avail the benefit of Notification No.18/2009-ST dated 07.07.2009, resulting in the demand being confirmed. The Revenue contended that although EXP-1 was filed, EXP-2 was not, leading to the denial of the exemption notification benefit. The appellant argued that they had filed EXP-2, but due to some parts remaining blank and no receipt of the documents, the benefit was denied. The appellant appealed against this decision, emphasizing that not filing EXP-1 and EXP-2 should not result in the denial of substantial benefits under the notification.

The appellant's counsel highlighted that a show cause notice in the past on similar grounds was dropped, considering the non-filing of EXP-1 and EXP-2 as a procedural lapse. The counsel argued that the appellant should not be denied the benefit of the notification due to such procedural issues. It was asserted that the appellant should not be required to pay service tax under the reverse charge mechanism if the conditions of the notification were met. The counsel emphasized that the appellant's intention to comply with the notification should be considered, and non-compliance with certain procedures should not be fatal to claiming the benefit of the exemption notification.

On the contrary, the Revenue supported the impugned order, stating that the appellant failed to comply with the conditions of Notification No. 18/2009-ST, justifying the denial of the exemption benefit and the demand for service tax. After hearing both parties and considering the submissions, the Tribunal noted that the appellant, being an exporter, had received services from an overseas Commission Agent and paid for the services. The Tribunal referred to a previous decision by the Hon’ble Apex Court, emphasizing that the substantial benefit of a notification should not be denied merely due to procedural lapses.

Relying on the principle established in the case of Malwa Industries Ltd., the Tribunal held that the appellant should not be denied the benefit of Notification No.18/2009-ST dated 07.07.2009 due to procedural lapses. Additionally, since the adjudicating authority had previously granted the benefit of the exemption notification for a prior period, which was accepted by the Revenue, the Tribunal concluded that the appellant was entitled to the benefit of the said notification. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.