2013 (11) TMI 1502 - AT - Service Tax

Denial of refund - Export of goods - Notification No.41/2007, dated 06.10.2007 - Bar of limitation - from the date of export (i.e. shipping bill) or from the date of payment of service tax where service tax has been paid under reverse charge method - Held that - The service tax law requires payment of tax only on payment of consideration to the agent abroad from who service is received. That being the case, the facts of this case cannot be equated with that in the case of GTN Engineering (I) Ltd. (2010 (8) TMI 314 - CESTAT, CHENNAI) and the legal principle of implying necessary changes into a section of one Act made applicable for purposes of another Act cannot go to such extent to defeat the very objective of a beneficial scheme like grant of refund due on exports. After coming to the conclusion that clause (a) to Explanation B will not apply, I have sequentially gone through the other clauses and I find that the most appropriate clause that will apply in this particular case, is clause (f), that is date of payment of service tax. In this case the applicant filed his claim within one-year from the date of payment of service tax and, therefore, I am of the view that the claim is filed within the time-limit and the appellant is eligible for refund - Decided in favour of assessee.

Summary

Issues:
- Interpretation of time limit for claiming refund under Rule 5 of Cenvat Credit Rules, 2004
- Applicability of Section 11B of Central Excise Act for refund of service tax
- Determining the relevant date for filing refund claim
- Whether the refund claim is time-barred

Analysis:
1. The judgment revolves around the interpretation of the time limit for claiming a refund under Rule 5 of Cenvat Credit Rules, 2004. The appellant, an exporter of leather goods, paid service tax on sales commission under reverse charge mechanism and sought a refund under Notification No.41/2007. The Tribunal initially referred to the decision in GTN Engineering (I) Ltd. case regarding the time limit for claiming a refund under Rule 5.

2. The Madras High Court reversed the Tribunal's decision, stating that the time limit prescribed under Section 11B applies for granting refunds under Rule 5. The adjudicating authority subsequently rejected the claim as time-barred, citing that it was filed after one year from the date of export, as per Section 11B, which defines the "relevant date" for refunds.

3. The appellant argued that the time limit should be calculated from the date of payment of service tax, not from the date of export. They contended that the claim was filed within one year from the payment of service tax, making it eligible for a refund. The Counsel emphasized that applying clause (a) of Explanation B to input services like marketing of goods would lead to absurd results.

4. The Revenue, however, maintained that the claim falls under Rule 5 of Cenvat Credit Rules and must adhere to the time limit set by Section 11B. The Madras High Court's ruling specified that the relevant date for computing the one-year period is the date of export, rendering the appellant's claim time-barred.

5. The final decision by the Tribunal favored the appellant, ruling that clause (a) of Explanation B does not apply to input services like marketing of exported goods. Instead, it determined that clause (f), the date of payment of service tax, should govern in this case. As the appellant filed the claim within one year from the payment of service tax, the Tribunal allowed the appeal, granting the refund.

This comprehensive analysis delves into the intricate legal interpretations and decisions made by the Tribunal, the Madras High Court, and the final ruling in favor of the appellant based on the specific application of relevant legal provisions.