2024 (12) TMI 1406 - AT - Service Tax

Refund of unutilised CENVAT credit - exports under the Rule 6A of the Service Tax Rules, 1994 (Export Rules) - export of service without payment of service tax - rejection on the ground of being barred by limitation as per N/N. 14/2016-CE(NT) dated 01.03.2016 - whether the time limit of one year for filing the refund claim under Rule 5 of the Cenvat Credit Rules, 2004 is to be counted from (i) the date of receipt of foreign exchange, or (ii) the end of the quarter in which the foreign exchange is received, in cases where the refund claims are filed on a quarterly basis? HELD THAT - The Adjudicating Authority was satisfied with respect to the conditions required to be fulfilled under Rule 5 of Notification No. 14/2016-CE(N.T) except the condition of filing of the refund claim before the proper officer within one year from the date of receipt of payment in convertible foreign exchange. The only ground on which the Adjudicating Authority has rejected the refund claim is that the filing of the refund claim was not within one year from the date of receipt of the payment in convertible foreign exchange. The foreign convertible exchange is received by the appellant for the period January 2017 to March 2017 between 10.01.2017 to 09.03.2017, therefore, the last payment for the quarter was received on 09.03.2017. It is found that for the exports of January 2017, FIRC was received on 10.01.2017, for exports in February 2017, FIRC was received on 10.02.2017, and for the exports in March, the FIRC was received on 09.03.2017, so for the quarter January to March 2017, the refund claim has to be filed before 31 March 2018, in the subject case appellant has filed refund claim on 28.03.2018, which is within one year from the quarter ending January-March 2017. Conclusion - The one-year period for filing of the refund would commence from the end of the quarter January 2017 to March 2017, since the refund claims are filed on quarterly basis. The refund claim has been filed within one year from the end of the quarter January 2017 to March 2017 on 28.03.2018. The rejection of the refund of Rs. 93,39,310/- is not tenable, and hence the appeal needs to be allowed - Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions presented and considered in the judgment are:

Whether the time limit of one year for filing a refund claim under Rule 5 of the Cenvat Credit Rules, 2004, should be counted from the date of receipt of foreign exchange or from the end of the quarter in which the foreign exchange is received, in cases where refund claims are filed on a quarterly basis.

2. ISSUE-WISE DETAILED ANALYSIS

Issue: Time Limit for Filing Refund Claim

Relevant Legal Framework and Precedents: The case revolves around Rule 5 of the Cenvat Credit Rules, 2004, and the notifications issued thereunder, specifically Notification No. 27/2012-CE(NT) as amended by Notification No. 14/2016-CE(NT). The Tribunal also considered precedents such as the Larger Bench decision in M/s Span Infotech (India) Pvt. Ltd. and various High Court judgments.
Court's Interpretation and Reasoning: The Tribunal interpreted that the relevant date for the time limit should be the end of the quarter in which the Foreign Inward Remittance Certificate (FIRC) is received, aligning with the decision of the Larger Bench in Span Infotech. This interpretation was favored over the date of receipt of payment in foreign exchange to facilitate the objective of refund provisions.
Key Evidence and Findings: The appellant received payments for exports between January 2017 and March 2017, and filed the refund claim on 28.03.2018. The Tribunal found that the claim was filed within one year from the end of the relevant quarter.
Application of Law to Facts: The Tribunal applied the interpretation that the time limit starts from the end of the quarter, finding that the appellant's refund claim was timely filed within this framework.
Treatment of Competing Arguments: The Tribunal considered the Revenue's argument that the time limit should start from the date of receipt of foreign exchange but found it unpersuasive in light of the beneficial nature of the Cenvat Credit Rules and the precedent set by the Larger Bench.
Conclusions: The Tribunal concluded that the rejection of the refund claim on the ground of limitation was not tenable and allowed the appeal.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis."
Core Principles Established: The judgment established that for the purpose of refund claims under Rule 5 of the Cenvat Credit Rules, the relevant date for the time limit is the end of the quarter when the FIRC is received, promoting a beneficial interpretation of the rules.
Final Determinations on Each Issue: The Tribunal determined that the appellant's refund claim was filed within the permissible time frame, thus allowing the appeal and granting consequential relief as per law.