2018 (6) TMI 1146 - AT - Service Tax

Refund of Service Tax paid - various input services - Clearing and Forwarding Agent Services - service charges in industrial set up of effluent treatment plant - Held that - As far as refund on Clearing and Forwarding Agent service is concerned, the appellant is entitled to the refund as the said service fall in the definition of input services . As far as service tax paid on service charges for setting up of effluent treatment plant is concerned, the matter needs to be remanded back to the original authority to verify the nature of services. Appeal allowed by way of remand.

Summary

Issues:
Refund of service tax paid on Clearing and Forwarding Agent Services and service charges in industrial set up of effluent treatment plant.

Clearing and Forwarding Agent Services:
The appellant, a 100% EOU, filed a refund claim for service tax paid on C&F Agent Services and service charges for setting up an effluent treatment plant. The Assistant Commissioner partially allowed the refund, but the Commissioner (Appeals) rejected a significant portion. The appellant argued that C&F services were used for export and thus eligible for refund under Rule 5. They contended that the final port, not the ICD, should be considered as the place of removal. The appellant also claimed that the service charges for the effluent plant fell under the definition of 'input service' as they were for modernization, renovation, or repair of the factory, making them eligible for refund under Rule 5.

Analysis - Clearing and Forwarding Agent Services:
The Commissioner's rejection of the refund on C&F Agent Services was deemed incorrect as the final port, not the ICD, was the place of removal for export goods. The appellant's argument that C&F services qualified as 'input services' was accepted. The Tribunal found in favor of the appellant, allowing the refund for C&F Agent Services.

Service Charges for Effluent Treatment Plant:
The Commissioner rejected the refund on service charges for setting up the effluent plant, claiming it was for construction, which was excluded from 'input services' post an amendment. The appellant argued that the expenses were for modernization, renovation, or repair of the factory, falling under 'input services.' The Tribunal decided to remand the matter back to the original authority for verification. They instructed a detailed examination to segregate costs related to civil construction from those related to the plant itself. The appeal was allowed by way of remand for further verification.

Conclusion:
The Tribunal allowed the appeal by remanding the matter back to the original authority for proper verification. They upheld the refund for Clearing and Forwarding Agent Services and directed a detailed examination of the nature of services for setting up the effluent treatment plant to determine the eligibility for refund. The judgment clarified the distinction between construction costs and other eligible service charges, ensuring a fair and thorough assessment of the refund claim.