2018 (4) TMI 614 - AT - Service Tax

Refund of service tax - service tax paid on specified services which have been used in export of goods - duty free shop in the departure terminal at Delhi International Airport - denial on the ground that since the Respondent is not an exporter, hence not eligible for the refund - N/N. 41/2012 ST dt. 29.06.2012 - Held that - There is no dispute that the goods were not cleared for home consumption, warehouse transfer or any other purpose but to International passenger for taking the goods outside India at departure terminal. Hence it is clear that the clearance was made for export of goods only. In terms of Para 3.3 of the Standing order dt. 03.03.2008 and Para 4.3 of Public Notice dt. 27.02.2006 it has been clarified that for the purpose of Section 69 the sales voucher/ bills issued by the assessee to the passenger shall be deemed to be shipping bill u/s 50 of the Act for the purpose of export and further that the goods can only be sold to international passenger. Hence it has to be accepted that the sale of goods at Duty free Shop at the departure terminal is exports. The shop, known as Indian Gourmet , is located only at the terminals of Mumbai International Airport, for which separate invoice was raised by the Mumbai International Airport Ltd to the Respondent. In such case, the Respondent is eligible to avail rebate of whole amount of service tax charged on rent amount - Further, in case of Delhi International Airport, the shop is located only at the departure terminal and, therefore, the Respondent is also eligible for the full rebate. Further, in case of processing / settlement charges charged by the bank for the card purchases made by the international passenger at the departure terminals at Mumbai, since the charges pertain to only departure terminal, therefore in such cases also the Respondent is eligible for full credit. Whether the balance service tax levied in respect of duty free shop located in Mumbai is available to what extent? - Held that -once it is established that the agreement made to MIAL is in the nature of rent for use of space and nothing else, the appropriate method of apportionment between the arrival and departure area would be on the basis of the usage of space, i.e. area occupied for the shops at the respective terminals - appellant have correctly arrived at the service tax in respect of input service attributable to the departure terminal. Scope of CA certificate - certificate is based on various riders - The certification has been done based on their professional guidelines and the certificate is given in accordance with the Guidance Note on Audit Reports and Certificates for the Special Purposes (Guidance Note) issued by the Chartered Accountants of India - the auditors are not required to check the compliance with the customs, excise or service tax nor are they expected to carry out a statutory audit . Hence, the objection raised by the Revenue does not in any way debar the Respondent from claiming the rebate and their refund claim cannot be rejected on the above ground. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Eligibility for refund under Notification No. 41/2012-ST.
2. Unjust enrichment due to input costs included in sale price.
3. Validity of refund claims for services at unregistered premises.
4. Method of apportionment of service tax on charges.
5. Status of duty-free shops as exporters.
6. Validity of the Chartered Accountant's certificate.

Issue-wise Detailed Analysis:

1. Eligibility for Refund under Notification No. 41/2012-ST:
The primary issue was whether the respondent, operating duty-free shops, qualifies as an exporter eligible for a service tax refund under Notification No. 41/2012-ST. The Tribunal concluded that the goods sold at duty-free shops are exports since they are cleared for international passengers, and no customs duty is levied. The Tribunal referenced Section 71 of the Customs Act, which allows warehoused goods to be removed only for home consumption, exportation, or other stipulated purposes. Since the goods were sold to international passengers, they were considered exported. The Tribunal also cited previous judgments and public notices that deemed sales vouchers as equivalent to shipping bills, reinforcing that the sales at duty-free shops are exports.

2. Unjust Enrichment:
The revenue argued that the respondent might have included input costs in the sale price, leading to unjust enrichment. However, the Tribunal found that the adjudicating authority did not base its rejection on this ground. Moreover, in cases of exports, the principle of unjust enrichment does not apply. The Tribunal referred to Section 93A of the Finance Act, 1994, and Notification No. 41/2012-ST, which do not consider unjust enrichment for export refunds.

3. Validity of Refund Claims for Services at Unregistered Premises:
The revenue contended that the respondent's refund claims included services at the Delhi International Airport, which was not registered. The Tribunal noted that the respondent had separate invoices for shops at the Mumbai International Airport and found them eligible for a full rebate. For the Delhi International Airport, the shop was located at the departure terminal, making the respondent eligible for the full rebate.

4. Method of Apportionment of Service Tax on Charges:
The revenue challenged the respondent's method of apportioning service tax based on shop size, arguing it was flawed as some charges were based on revenue share. The Tribunal upheld the Commissioner (Appeals)'s decision, which found the respondent's apportionment method correct. The Commissioner (Appeals) reasoned that the charges paid to Mumbai International Airport Ltd were essentially rent for space, and thus, apportionment based on area was appropriate.

5. Status of Duty-Free Shops as Exporters:
The revenue argued that the duty-free shops are not exporters, as the passengers are the actual exporters. The Tribunal disagreed, stating that the sales at duty-free shops are exports since the goods are taken out of India by international passengers. The Tribunal cited previous judgments and public notices that supported this view.

6. Validity of the Chartered Accountant's Certificate:
The revenue questioned the validity of the Chartered Accountant's certificate, which included disclaimers about the accuracy of the data. The Tribunal found that the certificate met the requirements of Notification No. 41/2012-ST, which only required certification that the input services were received, service tax paid, and services used for export. The Tribunal noted that the auditors followed professional guidelines and were not required to verify compliance with customs, excise, or service tax laws.

Conclusion:
The Tribunal dismissed the revenue's appeal, finding no reason to deviate from the Commissioner (Appeals)'s order. The Tribunal upheld that the respondent's sales at duty-free shops are exports, the apportionment method was correct, and the Chartered Accountant's certificate was valid. The refund claims were thus deemed admissible.