2015 (10) TMI 1738 - AT - Service Tax

Refund of Service tax paid initially on commission received for orders to procure and products sold by principal located outside, in India - Export of services - Period of limitation Revenue contends that services rendered are of marketing of products and cannot be said as export services - Provisions of section 11B would be applicable for claim of refund. Held That - Respondent rendered services to foreign principle in respect of products marketed in India, on commission basis - Rule 4 of the Export of Service Rules provides for export of service without payment of tax as export of service is not exigible to tax; amount deposit is thus not tax and as such there is no time limit for refund of deposit as Section 11B applies to refund of duty/tax only Appeal devoid of merits Dimissed in favour of assessee.

Summary

Issues:
1. Interpretation of service tax liability on commission received for orders procured and products sold by a principal located outside India.
2. Consideration of export services in the context of services rendered to a foreign principal for products marketed in India.
3. Application of Notification No. 11/2005-ST dated 19-04-2005 for refund claims and the relevance of Section 11B of the Central Excise Act, 1944.
4. Examination of the limitation period for claiming rebate under the notification and the applicability of Section 11B in service tax matters.

Analysis:
1. The Revenue filed an appeal against the first appellate authority's order granting a refund of service tax on commission received for procuring orders and selling products for a principal located outside India. The Revenue contended that the services rendered in India cannot be considered as export services, and the service tax liability should be discharged in India. The Revenue also argued that the refund claim should adhere to the provisions of Notification No. 11/2005-ST dated 19-04-2005 and be subject to the limitation period under Section 11B of the Central Excise Act, 1944.

2. The first appellate authority set aside the original order, recognizing the services rendered to a foreign principal for products marketed in India as export of services under Business Auxiliary Services. The authority clarified that the conditions of Notification No. 11/2005 were satisfied, and the procedure under the Export of Services Rules, 2005 was followed. Non-declaration of export in ST3 returns was deemed a procedural error and did not invalidate the refund claim. The authority held that the limitation period under Section 11B and the doctrine of unjust enrichment did not apply to the specific case.

3. The Revenue's grounds of appeal focused on the limitation for claiming rebate under Notification No. 11/2005 and the applicability of Section 11B in service tax matters. The Tribunal noted that the Revenue did not contest the factual position considered by the first appellate authority. The Tribunal referred to a similar case where it was held that the provisions of Section 11B do not apply to service tax matters concerning export of services, as the service tax deposited is considered a deposit, not tax, and therefore not subject to the time limit for refund under Section 11B.

4. The Tribunal dismissed the Revenue's appeal, emphasizing that the export of service is not taxable, and the amount deposited by the appellant is in the nature of a deposit, not tax. Therefore, the time limit for refund under Section 11B does not apply. The Tribunal differentiated the case from rulings related to export of goods under the Central Excise Rules, 1944. The appeal was rejected, affirming the first appellate authority's decision as correct and legal.