2019 (12) TMI 420 - AT - Service Tax

Refund of service tax - service tax for transportation of goods by rail paid inadvertently - reverse charge mechanism - HELD THAT - Clause (i) of Serial No. 20 of Notification No. 25/2012-ST dated 20/06/2012 exempts the services provided by way of transportation by rail from one place in India to another of Food Stuff including flowers, tea, coffee, jiggery, sugar, milk products, edible oil, excluding alcoholic beverages. The definition of Foodstuff has not provided anywhere in the Finance Act, 1994. The word food stuff which has been used of in Clause (i) of Serial No. 20 of the aforesaid notification is inclusive and not exhaustive . It is general principle of interpretation that the word includes or including when used, enlarges the meaning of the expression defined so as to comprehend not only such as things as they signify according to their natural import but also those things which the clause declares that they was included - the food stuff could be any substance that is used as food or to make food and therefore, the spices/masale can be termed as food stuffs and falls within the exemption notification as aforesaid. Amount deposited by the Appellant wrongly under different head - HELD THAT - It is clear that the amount of service tax for transportation of goods by rail has been wrongly paid by the appellant therefore paying service tax under wrong accounting code or under wrong head cannot be a valid reason for denying the valid refund claim of the service tax erroneously paid by the appellant. The Appellants are entitled for the refund claimed by them - appeal allowed - decided in favor of appellant.

Issues:
1. Entitlement for refund of Service Tax for transportation of goods by rail.
2. Consideration of documents and submissions by the authorities.
3. Applicability of Notification No. 25/2012-ST to exempt transportation of foodstuff.
4. Validity of refund claim for service tax erroneously paid.

Analysis:

Issue 1: Entitlement for refund of Service Tax for transportation of goods by rail
The Appellants, engaged in manufacturing masala products, inadvertently paid service tax for transportation by rail, which was exempted under Notification No. 25/2012-ST. The Appellants filed a refund claim of ?4,13,603, which was rejected by the Adjudicating Authority and upheld by the Commissioner. The Appellant argued that the rejection was based on grounds not mentioned in the show cause notice. The Appellant provided detailed documents and invoices to support their claim, but these were not considered by the authorities. The Tribunal found that the Appellants were entitled to the refund as the transportation by rail was exempted, and the erroneous payment could not be a reason to deny the refund claim.

Issue 2: Consideration of documents and submissions by the authorities
The Appellant submitted relevant documents, including invoices and a breakup of transportation by rail and road, before the Adjudicating Authority. However, these documents were not considered in passing the Order-in-Original. The Commissioner also failed to address the admissibility of these documents and wrongly assumed they were submitted after the order. The Tribunal criticized both authorities for not reviewing the provided documents, which were crucial for a just decision. The failure to consider these documents led to the erroneous rejection of the refund claim.

Issue 3: Applicability of Notification No. 25/2012-ST to exempt transportation of foodstuff
The Tribunal analyzed Notification No. 25/2012-ST, which exempts transportation of foodstuff by rail. The definition of "foodstuff" was found to be inclusive, allowing for a broad interpretation. Spices and masalas were considered as foodstuff based on various court precedents, including the Supreme Court. Therefore, the Appellants' products qualified as foodstuff, making them eligible for exemption under the notification.

Issue 4: Validity of refund claim for service tax erroneously paid
The Tribunal concluded that the Appellants' payment of service tax for transportation by rail was erroneous, as it was exempted under the notification. The incorrect payment under a different accounting code could not justify denying the valid refund claim. Hence, the Tribunal set aside the impugned order, allowing the Appeal and granting the refund claimed by the Appellants.

In conclusion, the Tribunal ruled in favor of the Appellants, acknowledging their entitlement to the refund for service tax erroneously paid for transportation of goods by rail, which was exempted under Notification No. 25/2012-ST. The authorities' failure to consider crucial documents and the broad interpretation of "foodstuff" under the notification were pivotal in the Tribunal's decision to allow the refund claim.

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