2018 (7) TMI 1796 - AT - Service Tax

Rebate/refund claim - export of services - services in the nature of International Inbound Services, that too, to the foreign telecom service providers - rejection of refund claim on the ground of time limitation and unjust enrichment. Principles of unjust enrichment - whether such service is an export service? - Held that - Export of Services Rules, 2005 qualifies the taxable services into three categories and we observe that the above mentioned telecommunication services provided by the appellant fall under Category 3 thereof. As per Rule 3(1)(iii) of the said Rules, this category deals with such services when provided in relation to business or commerce, be provision of such services to recipient outside India and when provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such service. Provided that the payment for such services is received in convertible foreign exchange - The appellant is observed as rendering the same service. Since the transaction is that of export, the principle of unjust enrichment would not be applicable - rejection of all six of the rebate claims being barred by the doctrine of unjust enrichment, is hereby set aside. Time limitation - whether the time limit prescribed under Section 11B of the Central Excise Act, 1994 is applicable to the rebate claims? - Held that - The appellant herein had filed the rebate claim in terms of the aforesaid Notification of 19.05.2005 issued under Rule 5 of Export Service Rules, 2005. The period covered for the rebate was April 2007 to March 2008 and April 2008 to March 2009 and both the applications for refund were filed on 30.11.2010 - provision of Section 11B of the Central Excise Act, 1994 which deals with excise duty, has been made applicable for Service Tax vide Section 83 of the Finance Act, 1994. This would imply that the time limit of one year from the payment of tax for filing of refund claim would apply in respect of Service Tax refund also. Irrespective, there is no time limit set out in the respective notifications, it is otherwise the settled position of law that even if a law is silent on the time limit applicable, a reasonable time limited has to be read into the law. In the present case, six rebate claims of appellant are in question - Four have been filed within a period of one year, i.e., not only within the limit of time prescribed under Section 11B, but also within the period of reasonable time for the purpose - Since the appellant has failed to exercise the same doctrine of reasonable time with respect to remaining two claims, those have rightly been rejected by the Commissioner (Appeals) being barred by time. Appeal allowed in aprt.

Summary

Issues:
- Rejection of six refund claims by the Commissioner (Appeals) on grounds of being time-barred and unjust enrichment.

Detailed Analysis:

1. Unjust Enrichment Issue:
The appellant provided International Inbound Roaming (IIR) services to Foreign Telecom Operators (FTOs) and claimed rebates under Notification 11/2005-ST. The rejection of four refund claims on grounds of unjust enrichment was challenged. The appellant argued that unjust enrichment principles do not apply to export services under Export of Services Rules, 2005. Citing relevant judgments, the appellant contended that unjust enrichment is not applicable to exports, as per Section 11B of the Central Excise Act, 1994. The Tribunal found that the services provided fell under Category 3 of the Export of Services Rules, qualifying as export services. The circular clarified that for Category 3 services, the location of the service provider determines export, not the place of performance. As the services accrued benefits outside India, the principle of unjust enrichment did not apply. The rejection of all six rebate claims on unjust enrichment grounds was set aside.

2. Time Limitation Issue:
The rejection of two claims as time-barred was also contested. The appellant argued that since the rebate claims were filed under Notification 11/2005-ST, which did not specify a time limit, they should not be considered time-barred. However, the Tribunal noted that Section 11B of the Central Excise Act, 1994, made applicable to Service Tax, implied a one-year time limit for filing refund claims. Referring to legal precedents, the Tribunal held that even in the absence of a specified time limit in notifications, a reasonable time limit must be implied. Four claims were filed within the prescribed time frame, while two were not. Consequently, the appeal partially allowed, rejecting the two claims filed on 30.11.2010 as time-barred, while holding unjust enrichment inapplicable.

By analyzing the issues of unjust enrichment and time limitation, the Tribunal provided a comprehensive judgment, clarifying the applicability of legal provisions and precedents in determining the eligibility of the appellant's refund claims.