2015 (8) TMI 685 - AT - Service Tax

Denial of refund claim - Export of services - Unutilized CENVAT Credit - whether the service provided from India were used outside India - Held that - As the reports have been exported and the same have been utilized outside India, and remuneration for the services have been received in convertible foreign exchange, the appellant satisfied both the conditions under Rule 3(2) (a) & 9b) of the Export of Service Rules, 2005. Accordingly, it is export of service. It is immaterial how the foreign client utilizes the reports prepared by the appellant. Whether the appellant have received remittance in convertible foreign exchange - Held that - Appellant s Bank at Mumbai have rightly received the money in Indian rupees as RBI permits payment in rupee from the account of a Bank situated in any foreign country other than a member country of Asian Clearing Union. Thus, the foreign remittance is in order. - Modus operandi of the Bank is, if a Bank received foreign currency abroad from the buyer of service and thereafter Bank converted it in INR and diverted the said INR to their branch in India. The whole mode of payment is as per the RBI guidelines, the learned Commissioner (Appeals) is in error in concluding that the remittance had not been received in foreign exchange under the Export of Service Rules. - appellant has received the remittance in convertible foreign exchange. Disallowance of input service of life insurance premium and Rent-a-cab services - cost incurred with respect to car hire rental and insurance premium paid for the staff, form part of the cost for which bills have been raised in the quarter and remittance have been received by the appellant assessee, for providing the output service, I hold that these two services in question are eligible input service. Whether refund can be claimed on the basis of services provided during the refund period but the invoices for the same has been raised in the subsequent quarter - In respect of the refund claimed for the period November, 2011 to March, 2012, the refund claim filed on 30.10.2012 based on the invoices dated 9.1.2012, 14.6.2012 and 31.8.2012. The period of refund was up to March, 2012 and therefore, the invoices raised at later date cannot be considered and accordingly, the learned Commissioner (Appeals) held that the adjudicating authority has correctly rejected the refund claim on this account. - Decided partly in favour of assessee.

Issues Involved:
1. Whether the service exported is used outside India as required under Rule 3(2) of the Export of Service Rules, 2005.
2. Whether the consideration for service exported has been received in convertible foreign exchange.
3. Correlation between export invoices and FIRC.
4. Allowability of Rent-a-Cab service and life insurance for staff as input service.
5. Whether receipt (foreign remittance) can be claimed based on service provided during the refund period, although invoice was raised after the quarter.
6. Justification of rejection of refund on the ground of export invoices for service raised for the previous quarter in the next quarter, leading to a double claim.

Detailed Analysis:

1. Whether the service exported is used outside India:
The appellant argued that the services provided from India, such as preparing reports and sending them to a client in Mauritius, were used outside India as required by Rule 3(2) of the Export of Service Rules, 2005. The reports were utilized by the foreign client for making investment decisions abroad. The tribunal held that as the reports were exported and utilized outside India, and the remuneration was received in convertible foreign exchange, the appellant satisfied the conditions under Rule 3(2)(a) & (b). Thus, it was deemed an export of service.

2. Whether the consideration for service exported has been received in convertible foreign exchange:
The adjudicating authority initially observed that the export proceeds were received in Indian Currency. However, the appellant provided evidence that the remittance was received in foreign currency and converted into INR by the bank as per RBI guidelines. The tribunal held that the remittance was in order and received in convertible foreign exchange.

3. Correlation between export invoices and FIRC:
The impugned order noted a lack of correlation between export invoices and FIRC, suggesting no remittance against the export invoices. The appellant explained that payments were received after raising invoices and sometimes as advances, and all transactions were recorded in the books of account. The tribunal remanded the matter to the adjudicating authority to examine the correlation of bills with FIRC, directing that if remittance for the bills raised was found, the refund claim should not be rejected.

4. Allowability of Rent-a-Cab service and life insurance for staff as input service:
The impugned order disallowed these services, considering them welfare activities unrelated to the export of services. The appellant argued that these expenses were part of the business cost and included in the operating expenses billed to the client. The tribunal held that the costs incurred for car hire rental and insurance premium for staff were part of the cost for which bills were raised and remittance received, thus eligible as input service.

5. Whether receipt (foreign remittance) can be claimed based on service provided during the refund period, although invoice was raised after the quarter:
The impugned order rejected the refund claim for services provided during the refund period but invoiced later. The appellant explained that invoices were regularly raised, and the scheme of refund did not mandate the claim period to match the billing period. The tribunal held that the Commissioner (Appeals) erred in requiring one-to-one correlation and decided in favor of the appellant, noting that all output services were exported to a single client.

6. Justification of rejection of refund on the ground of export invoices for service raised for the previous quarter in the next quarter:
The impugned order rejected the refund claim, suggesting a double claim for the same invoice. The appellant clarified that no simultaneous refund and rebate were claimed for the same invoices. The tribunal held that there was no simultaneous claiming of refund and rebate for the same invoices, deciding this ground in favor of the appellant.

Conclusion:
The appeals were allowed, with the exception of Appeal No. ST/818/12, which was partially remanded for the limited issue of correlation of output invoices with remittance received. The appellant was directed to appear before the adjudicating authority with relevant documents for reconciliation. The rest of the appeals were allowed with consequential relief in accordance with the law.

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