2018 (4) TMI 26 - AT - Service Tax

Refund of accumulated CENVAT credit - time limitation - rejection on the grounds viz the appellant has received all the export proceeds in month of July, which is not during the claim period i.e. April-June 2012 and also on the ground that no export of service is involved in the present case - Held that - the original authority has passed the order without complying with the principles of natural justice and therefore, the order passed is contrary to the principles of natural justice and is bad in law. Board vide its Circular No.120/01/2010-ST dt. 19/01/2010 has clarified in para 3.3 that in the case of service providers exporting 100% of its services, such disputes should not arise and refund of CENVAT credit irrespective of when he has taken the credit, should be granted if otherwise in order. Rejection of refund not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of refund claim under CENVAT Credit Rules based on export of services during a specific period.

Analysis:
The appeal was directed against the Commissioner of Service Tax (Appeals) order rejecting the refund claim of the appellant related to accumulated cenvat credit for exported output services during April-June 2012. The claim was rejected because the export proceeds were received in July, falling outside the claim period. The appellant argued that the order lacked consideration of statutory provisions and was based on assumptions without proper review of facts. It was highlighted that the original authority did not issue a show-cause notice, violating principles of natural justice. The appellant referred to relevant case laws to support their argument.

On the merit of the claim, the appellant contended that services provided to a foreign entity qualified as export of service under relevant rules. The appellant asserted compliance with conditions for filing the refund claim and disputed the authorities' interpretation of the new refund notification issued in June 2012. The appellant emphasized that the services were exported during the relevant period and the notification did not specify a condition regarding the timing of proceeds receipt for export turnover calculation.

The Revenue argued against the refund, stating that the appellant did not receive proceeds in the same quarter as the refund claim. However, the Tribunal found that the original order lacked compliance with principles of natural justice and ruled in favor of the appellant. It was noted that the appellant met all conditions for service export as per Rule 6A of the Service Tax Rules. Referring to a Board circular, the Tribunal emphasized that exporters of 100% services should be granted CENVAT credit refund if in order, without restrictions on credit timing. Considering the circular and Notification No.5/2006, the Tribunal set aside the order rejecting the refund, allowing the appeal of the appellant.

In conclusion, the Tribunal overturned the decision to reject the refund claim, emphasizing compliance with export service conditions and principles of natural justice. The appellant's argument regarding the timing of proceeds receipt and adherence to relevant notifications played a crucial role in the Tribunal's decision, ultimately leading to the appeal being allowed.