2014 (8) TMI 853 - AT - Service Tax

Refund - export of goods - Terminal handling service - documentation & CHA charges in terms of Notification No.41/2007-ST dated 06.10.2007 claiming that the service on which service tax was paid fell under the category of Port Service - refund was rejected on the ground that the appellants had availed drawback in respect of goods exported by them and also the service tax in respect of which refund was sought was not paid under any of the services mentioned in Notification No.41/2007-ST dated 06.10.2007 - Held that - One of the conditions prescribed in the said Notification is that the said goods have been exported without availing drawback of service tax paid on the specified services under Customs, Central Excise Duties and Service Tax Drawback Rules 1995. It is seen that the said condition is unambiguously worded, with only one interpretation that in case the appellants had availed of drawback of service tax paid under the aforesaid Drawback Rules they become in-eligible for the benefit under Notification No. 41/2007-ST and the appellants have conceded that they have availed of such drawback. Custom House Agent service is a taxable service under Section 65 (105) (h) read with Section 65(105) (35) of the Finance Act 1994 and this services is not included in the schedule to Notification No.41/2007-ST. Obviously, therefore, the service tax paid by their CHA for providing the CHA service can not be treated as service tax paid under Port Service and therefore can not be refunded under Notification No.41/2007-ST. CHA service is a distinct service and the service tax is paid by their CHA. Thus there is no classification ambiguity in the present case. So, the said CESTAT judgment does not come to the appellants rescue at all - Decided against assessee.

Summary

Issues:
Refund claim rejection on service tax paid for export related charges under Notification No.41/2007-ST.

Analysis:
The appellants filed a refund claim of Rs. 2,37,136 for service tax paid on terminal handling and CHA charges under Notification No.41/2007-ST. The claim was rejected as the appellants had availed drawback on exported goods and the service tax was not paid under services specified in the notification. The appellants argued that the drawback claimed was unrelated to the taxable services at the port and that services in the port area should be considered as port services, making them eligible for the refund.

Upon examination of Notification No.41/2007-ST, it was found that one condition stated goods must be exported without availing drawback of service tax paid under specified rules. As the appellants had availed such drawback, they were deemed ineligible for the refund under the notification. Out of the total service tax amount, Rs. 2,24,872 was for terminal handling, documentation, and CHA charges, claimed to be covered under port services. However, the appellants failed to prove that the service tax claimed for refund was actually paid under port services. Invoices showed that CHA services were provided by a registered CHA, which is a taxable service not included in the specified services under the notification.

The appellants cited a CESTAT Larger Bench decision to support their case, but the judgment focused on service classification under port services, which did not apply to the distinct CHA service in this case. Hence, the judgment did not favor the appellants. Ultimately, the tribunal found no merit in the appeal and rejected it.

In conclusion, the tribunal upheld the rejection of the refund claim as the appellants had availed drawback on exported goods and failed to demonstrate that the service tax claimed for refund was paid under services specified in Notification No.41/2007-ST. The CHA service, for which a significant portion of the service tax was paid, did not fall under the specified services for refund, leading to the dismissal of the appeal.