2024 (9) TMI 839 - AT - Service Tax

Refund of Service tax - input service used in export of goods - services provided by the Commission- Agency located outside India - N/N. 41/2007-S.T. dated 06.10.2007,- as amended - period April- 2008 to December, 2008 - time barred or not - HELD THAT - There is an established internationally acceptable principle that taxes and duties should not be exported, to enable a level playing field in the international market for exports. Hence, indirect taxes on inputs and input services are to be refunded or rebated/reimbursed. As a number of input services are used in export of goods, the Government had provided a mechanism for such refund/remission of service tax involved in such exports. On plain reading of the instructions of the Ministry of- Finance dated 17.04.2008, it transpires that service tax paid on input services used in exports are required to be refunded by a mechanism provided therein. Such refund of service tax paid was introduced as trade facilitation measure with an aim to expeditiously process and sanction the refund claims, by allowing the exporters to file periodically (for each quarter) and with close monitoring at the highest level in the CBEC s field formations - The second notification dated 07.07.20209 further facilitated by specifically including a number of taxable services for which refund claims can be submitted by exporters and the time period for filing such refund claims was made for longer period of one year from the date of export of the relevant export of goods. It is also found that service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him is covered under the taxable category of sub-clause (zzb) of Section 65(105) of the Finance Act, 1994 and it was provided as one of the eligible services on which refund is permitted in the aforesaid notifications. Since there was certain doubts raised about the applicability of the superseding notification to the past exports made during the application of the earlier notification dated 06.10.2017, the Government had issued instructions on 01.01.2010 by clarifying that such refund benefits should be extended to those exports covered in the earlier period also - On careful perusal of the aforesaid instructions, it transpires that the Government had provided the refund of service tax involved in respect of exports, as a nature of benefit by simplifying the scheme further in providing certain minimum conditions such as (i) filing of refund claims within stipulated one year period, and (ii) that such refund claim has not been filed earlier with the departmental authorities. On perusal of the refund application dated 31.03.2010 filed by- the appellants, it is clearly seen therein that at Sl. No.6, they have specifically declared that no refund on this account has been claimed- or received by them earlier. Further, for the refund relating to the period April, 2009 to June, 2009 i.e., quarter ending 30.06.2009, the appellants have filed the refund on 31.03.2010, i.e., within stipulated- one year period. Thus, on account of both the conditions stipulated in the instructions dated 01.01.2010, the appellants fulfill the requirements for sanction of refund claim made before the departmental authorities. Further, there was no finding that these conditions have not been fulfilled by the authorities below in the impugned order. There is no merit in the impugned order to the extent that it had denied the refund claim of Rs.16,17,016/- by upholding the original order dated 06.01.2016. Accordingly, the impugned order dated 18.05.2018 is liable to be set aside as being factually incorrect and not legally sustainable. The impugned order dated 18.05.2018 is set aside - Appeal allowed.

Summary

Issues Involved:
1. Admissibility of the refund claim filed on 31.03.2010 for service tax paid on services provided by the Commission Agency located outside India for the period April 2009 to June 2009.
2. Whether the refund claim filed on 31.03.2010 is time-barred.

Issue-wise Detailed Analysis:

1. Admissibility of the Refund Claim:
The appellants, engaged in the export of goods, filed refund claims for input services under Notification No. 41/2007-S.T. dated 06.10.2007. The original authority rejected part of the refund claims, which was upheld by the Commissioner (Appeals-IV). The Tribunal, in its Final Order No. A/2563-2564/15/SMB dated 17.06.2015, remanded the matter for fresh consideration, noting that the condition of non-availment of drawback was omitted by Notification No. 33/2008-ST dated 07.12.2008, and the refund claims were within the stipulated time. In the de novo adjudication, the original authority sanctioned part of the refund but rejected Rs. 16,17,016/- for the period April 2009 to June 2009, which was upheld by the Principal Additional Director General (ADG), DGPM. The Tribunal, upon direction from the Bombay High Court, reconsidered the matter and found that the appellants fulfilled the conditions stipulated in the instructions dated 01.01.2010, which clarified that the refund scheme under Notification No. 17/2009-S.T. dated 07.07.2009 applies to exports prior to its issuance, provided the refund claim is filed within one year and no previous refund claim was filed. The Tribunal concluded that the appellants are legally entitled to the refund of Rs. 16,17,016/-.

2. Time-barred Refund Claim:
The original authority and the Principal ADG, DGPM, rejected the refund claim on the grounds of being time-barred. However, the Tribunal noted that the refund claim for the period April 2009 to June 2009 was filed on 31.03.2010, which is within the stipulated one-year period as per the instructions dated 01.01.2010. The Tribunal emphasized that the refund claim was filed within the permissible time frame and that the conditions for such refund claims were met, thus overturning the previous decisions and allowing the refund.

Conclusion:
The Tribunal set aside the impugned order dated 18.05.2018, allowing the refund claim of Rs. 16,17,016/- for service tax paid on services provided by the Commission Agency located outside India for the period April 2009 to June 2009. The appeal filed by the appellant was allowed in their favor.