2016 (2) TMI 446 - AT - Service Tax

Refund - tax paid on input services utilized for export services - failure to submit the relevant documents and follow the procedures as prescribed - Rule of the Export of Service Rules, 2005 - Held that - A plain reading of the notification indicates that taxable services has to be exported in terms of Rule 3 and payment of export of such taxable services has to be received in India in convertible foreign exchange and the duty/tax has been paid on input or input services. All these contentions are satisfied in this appeal filed by the appellant. - when it comes to substantial benefit the absence of specific embargo in the rules, the benefit should not be denied to an assessee.

Summary

Issues Involved:
1. Refund claim of service tax paid on input services for the period September 2004 to April 2005.
2. Applicability of Rule 5 of the Export of Service Rules, 2005, and Notification No. 12/2005 for exports made prior to their respective effective dates.
3. Interpretation of the statutory provisions and notifications regarding retrospective application.

Issue-wise Detailed Analysis:

1. Refund Claim of Service Tax Paid on Input Services:
The appellant filed a refund claim on 12.01.2006 under Rule 5 of the Export of Service Rules, 2005, for the tax paid on input services utilized for export services during the period from September 2004 to June 2005. The adjudicating authority rejected the refund claim on the grounds that the appellant did not submit the relevant documents and the procedures outlined in Notification 12/2005 dated 19.04.2005 were not applicable for exports made prior to that date. The first appellate authority concurred with this view, rejecting the refund claim for the period prior to 19.04.2005 and remanding the matter for the period post 19.04.2005 for reconsideration.

2. Applicability of Rule 5 of the Export of Service Rules, 2005, and Notification No. 12/2005:
The primary issue is whether Rule 5 of the Export of Service Rules, 2005, and Notification No. 12/2005, which came into effect on 19.04.2005, apply to exports made prior to their respective effective dates. The appellant argued that the rejection of the refund claim was incorrect and cited the judgment in the case of WNS Global Services P. Ltd., which was upheld by the Hon'ble High Court of Bombay. The judgment indicated that the benefit of export rebate should not be denied even if the services were exported prior to the rules being brought into the statute.

3. Interpretation of Statutory Provisions and Notifications:
The Tribunal considered the submissions and found that both lower authorities misdirected their findings regarding the non-applicability of the Rules. The Tribunal noted that Rule 5 of the Export of Service Rules, 2005, though brought into statute on 19.04.2005, does not specify that it is only applicable for exports made from that date. The relevant part of Rule 5 states that the Central Government may grant a rebate of service tax paid on taxable services or input services used in providing such taxable services, without specifying an effective date for the applicability of the Rule itself. The notification also does not indicate that the services must be exported on or after 19.04.2005 to avail the benefit of the rebate of CENVAT credit.

The Tribunal referenced the case of WNS Global Services Pvt. Ltd., where it was held that refund claims filed after the effective date of the substituted Rule 5 should be governed by the rules as they stood on those dates, and the benefit should not be denied based on a condition not specified in the rule or notification. The Hon'ble High Court of Bombay upheld this view, stating that the substituted Rule 5 does not distinguish between exports made prior to or after 14.03.2006, and thus, refund of unutilized CENVAT credit is available for exports made in the past.

Conclusion:
The Tribunal concluded that the impugned order was unsustainable and set it aside. The appeal was allowed with consequential relief, if any. The Tribunal emphasized that the absence of a specific embargo in the rules regarding the substantial benefit should not lead to the denial of such benefits to the assessee.