2013 (11) TMI 250 - AT - Service Tax

Refund claim - Commission paid to the agents - recovery of refund already granted - Held that - The first appellate authority, on an appeal filed by the Revenue has come to a conclusion that the said Notification 9/2009-ST grants refund of the amount of service tax utilised in SEZ area, if the same is paid under Section 66 of the Finance Act, 1994, while the appellant herein has paid the service tax under Section 66A of the Finance Act, 1994. We find strong force in the contentions raised by the learned counsel that the provisions of Section 66A were clarified as not a charging Section by itself but created a legal fiction to charge the services which were rendered to the service recipient in India. This clarification is given by the Board by a Circular No. 354/148/2009/TRU dated 16.7.2009. If the Board is of the view that Section 66A, is not a charging Section by itself and the charging Section remains 66, in our view, taking a holistic approach towards the issue wherein it is not disputed that the appellant is situated in SEZ area, has paid the service tax and the goods are exported, denial of the refund claim to the appellant only on hyper- technicalities, seems to be incorrect - Prima facie appellant is eligible for the refund and hence impugned which sets aside the refund filed by the appellant seems to be incorrect. We find that the appellant has made out a prima facie case for the waiver of pre-deposit of the amounts involved. Application for the waiver of pre-deposit of the amounts involved is allowed and recovery thereof stayed till the disposal of appeal - Decided in favour of assessee.

Summary

Issues:
Refund claim denial based on interpretation of Section 66A of Finance Act, 1994 under Notification No. 9/2009-ST - Eligibility for waiver of pre-deposit.

Analysis:

Issue 1: Refund claim denial based on interpretation of Section 66A of Finance Act, 1994 under Notification No. 9/2009-ST:
The case involved a refund claim by the appellant for service tax paid on commissions to agents staying abroad under Section 66A of the Finance Act, 1994. The appellant, situated in a Special Economic Zone (SEZ), sought refund under Notification No. 9/2009-ST. The first appellate authority rejected the claim, stating that the notification allows refunds for service tax paid under Section 66, not Section 66A. However, the appellant argued that Section 66A is not a charging section but a legal fiction to charge services rendered in India, as clarified by Circular No. 354/148/2009/TRU. The Tribunal agreed with the appellant, emphasizing a holistic approach considering the SEZ location, payment of service tax, and export of goods. The denial of the refund claim based on technicalities was deemed incorrect, and the appellant was found eligible for the refund.

Issue 2: Eligibility for waiver of pre-deposit:
The appellant sought a waiver of pre-deposit of Rs. 20,01,908/- pending the appeal. The Tribunal, after considering the arguments and prima facie case presented by the appellant, found that the appellant was eligible for the refund. The Tribunal allowed the application for the waiver of pre-deposit, staying the recovery of the amount until the appeal's disposal. The decision was made in favor of the appellant, acknowledging the prima facie case made for the waiver of pre-deposit.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the waiver of pre-deposit and staying the recovery of the amount until the appeal's final disposal. The judgment highlighted the interpretation of Section 66A of the Finance Act, 1994 under Notification No. 9/2009-ST, emphasizing the clarification provided by Circular No. 354/148/2009/TRU regarding the charging nature of Section 66A. The decision underscored the importance of a holistic approach in considering refund claims, especially in cases involving SEZ locations and service tax payments, to prevent denial based solely on technicalities.