2022 (7) TMI 1179 - AT - Service Tax

Refund of service tax paid - input services utilised for export of goods made under 26 shipping bills of export - benefit of provision 3 (h) of Notification No.41/2012-ST dated 29.06.2012 - the ld.Commissioner (Appeals) observed that the exporter should be registered with the Export Promotion Council and being registered with The Solvent Extractors Association of India, which is a Trade Promotion Organisatiion (TPO), would be of no help in getting the benefit of the said Notification - HELD THAT - The Deputy Commissioner of Service Tax has passed a detailed order incorporating shipping bill numbers, date, name of service provider, invoice numbers etc. and in short, he has gone through all the documents and has discussed the conditions of the said Notification or eligibility of refund claim and after making point-wise observation and has finally sanctioned the refund. It can be seen that there is no dispute as to the fact that the goods were exported by the appellant-assessee. Once it is not in dispute that the services are specified for refund purpose, and since Service Tax was actually paid on specified services pertaining to export activity, in terms of the broad scheme of refund under Notification No. 41/2012-S.T. as amended with clarifications, refund must be granted to the exporter - the order passed by the Learned Commissioner (Appeals) cannot be sustained as substantive benefit should not be denied to an assessee if the conditions are fulfilled. It would not be out of place to mention that the sole intention of the Government to bring out these rebate schemes is to promote the Indian exporters to enjoy a level playing field and to compete with the exporters of other countries in the global market. Further, it is not the intention of the Government to export taxes, hence after much research these schemes have been notified and if the refund claims are rejected on such flimsy grounds, it defeats the very purpose of rebate schemes and traps the exporters under unnecessary litigations. Appeal allowed.

Summary

Issues:
Refund of service tax for export of goods under specific shipping bills; Interpretation of Notification No. 41/2012-ST regarding registration with Export Promotion Council; Review of order by Commissioner of Service Tax; Appeal before First Appellate Authority; Conditions for refund eligibility; Dispute over registration with Export Promotion Council; Validity of membership with Trade Promotion Organization; Justification of impugned order by Revenue; Detailed analysis of appeal records; Disagreement with Commissioner (Appeals) decision; Denial of substantive benefit to assessee; Government's intention behind rebate schemes; Promotion of Indian exporters; Competitiveness in global market; Rejection of refund claims on flimsy grounds; Judicial intervention to ensure fair treatment of exporters.

Detailed Analysis:
The case involves a dispute over the refund of service tax paid on input services utilized for exporting goods under specific shipping bills. The initial refund was sanctioned by the Deputy Commissioner but was later reviewed by the Commissioner of Service Tax, who found the appellant ineligible due to non-registration with the Export Promotion Council as required by Notification No. 41/2012-ST. The appeal before the First Appellate Authority resulted in the Commissioner (Appeals) allowing the Department's appeal based on the registration requirement with the Export Promotion Council.

The Authorized Representative for the Appellant argued that the principal condition in the Notification was not registration with the Export Promotion Council and highlighted their membership with a Trade Promotion Organization recognized by the Government of India. They also mentioned additional memberships taken as protective measures and referred to relevant trade policy provisions supporting their eligibility for the refund.

On the other hand, the Revenue justified the impugned order, emphasizing the mandatory nature of registration with the Export Promotion Council for refund eligibility. The Tribunal, after hearing both sides and examining the appeal records, noted the detailed order by the Deputy Commissioner and the Commissioner (Appeals)' decision based on the registration issue. The Tribunal disagreed with the Commissioner (Appeals) and emphasized that if the conditions for refund under the Notification were met, the substantive benefit should not be denied to the assessee.

The Tribunal highlighted the government's intention behind rebate schemes to promote Indian exporters and ensure competitiveness in the global market. It criticized the rejection of refund claims on flimsy grounds, stating that such actions defeat the purpose of rebate schemes and subject exporters to unnecessary litigations. Ultimately, the Tribunal set aside the impugned order, allowing the appeal with consequential benefits for the appellant. The judgment aimed to ensure fair treatment of exporters and uphold the objectives of rebate schemes in promoting Indian exports.