2023 (9) TMI 570 - AT - Service Tax

Rebate claim rejected - no correlation between the exported services and Foreign Inward Remittance Certificate (FIRC) - documentary evidence to show that the services were rendered outside India was not furnished with documentary evidence - HELD THAT - There are only two conditions stipulated in the said Notification No. 11/2005-ST dated 19.04.2005. The said conditions are that the taxable service is required to be exported and payment of the export should be received in India in convertible foreign exchange and that the service tax and cess has to be paid on taxable services exported to be eligible to claim rebate of the said paid taxes. While dealing with the rebate claim under the said notification, there is no scope for raising any other issues than the issue related to the said two conditions and if the said two conditions are satisfied, then the rebate claim needs to be sanctioned - thus the other issues raised and deliberated in the impugned order such as admissibility of Cenvat credit or delay in amendment of registration etc. have no bearing on admissibility of rebate in the present proceedings. Whether the above two conditions are satisfied by the appellant? - HELD THAT - It is found through the proceedings that there is no dispute on the fact that the appellant had paid service tax in respect of which the appellant had applied for claim of rebate. Therefore, now the only condition that needs to be satisfied is whether the appellant had received convertible foreign exchange in respect of the claims made by them. We understand that unless convertible foreign exchange has been received, the rebate in respect of such invoice cannot be granted to the appellant. During the hearing, appellant had produced FIRC wise list of invoices establishing that against a particular FIRC, various invoices were covered through which service tax was paid. However, this compilation was not submitted to the original authority - it is deemed fit to remand the matter to the original authority with a direction not to raise any other issue and examine receipt of convertible foreign exchange against individual invoices or set of invoices covered by the rebate claim and if such foreign exchange is received, then to that extent to allow the rebate. Appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in the judgment are eligibility for availing and utilizing Cenvat credit, correlation between exported services and Foreign Inward Remittance Certificate (FIRC), classification of services, delay in amending registration for certain services, and establishing receipt of convertible foreign exchange for rebate claim.

Eligibility for availing and utilizing Cenvat credit:
The appellant, an exporter of information technology software, filed a claim for rebate under Notification No. 11/2005 for services exported from October 2008 to December 2008. The original authority rejected the refund claim, citing reasons such as delay in amending registration, lack of correlation between invoice and foreign exchange remittance, and absence of documentary evidence proving services were rendered outside India. The Commissioner (Appeals) upheld this decision. However, the Tribunal held that the eligibility for rebate is contingent upon satisfying two conditions: exporting taxable services and receiving payment in convertible foreign exchange. The Tribunal emphasized that issues like Cenvat credit or registration delay are irrelevant to rebate eligibility. The matter was remanded to the original authority to verify receipt of foreign exchange against individual invoices for rebate approval.

Correlation between exported services and Foreign Inward Remittance Certificate (FIRC):
The appellant submitted reconciliation statements and comprehensive compilations of invoices covered by individual FIRC to establish receipt of export proceeds. The appellant argued that since export proceeds were received and service tax was paid, there should be no doubt about the export of services. The Tribunal acknowledged the importance of providing copies of agreements with foreign importers to substantiate service exportation. However, it emphasized that the key requirement for rebate eligibility is the receipt of convertible foreign exchange against each invoice, as per the conditions of Notification No. 11/2005.

Classification of services and delay in amending registration:
The original authority raised concerns about the classification of services and the delay in amending registration for certain services. Despite the appellant's explanations and submissions of relevant documents, the original authority rejected the rebate claim. The Tribunal clarified that issues beyond the two conditions stipulated in the notification, namely exporting taxable services and receiving payment in convertible foreign exchange, are not pertinent to determining rebate eligibility.

Conclusion:
The Tribunal allowed the appeal by way of remand, directing the original authority to focus solely on verifying the receipt of convertible foreign exchange against individual invoices or sets of invoices covered by the rebate claim. The appellant was instructed to cooperate with Revenue authorities for the process. The judgment emphasized the strict adherence to the conditions specified in Notification No. 11/2005 for claiming rebate on exported services.