9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (9) TMI 999 - AT - Service Tax100% EOU - refund claim - input services availed for the services exported - denial on the ground that the export realization is shown in Indian Currency - Rule 3(2)(b) of Export of Service Rules, 2005 - Held that - merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange as provided in Export of Service Rules, 2005. Since the Indian rupee is received from the recipient of services through their foreign bank, Silicon Valley Bank of USA, the receipt of Indian rupee shall be treated as convertible foreign exchange - Further, it is also clearly certified in the FIRC issued by the Standard Chartered Bank that remittances are in convertible foreign exchange. Similar issue decided in the case of Sun-Areas Real Estate Pvt. Ltd. vs. CST, Mumbai-I 2015 (5) TMI 885 - CESTAT MUMBAI , where it was held that even though the appellant received the payment in Indian rupees but in view of the FEMA Notifications issued by the RBI, the same is deemed to be in convertible foreign exchange and accordingly the condition as provided under Rule 3(2) of Export of Service Rules, 2005 stands complied. Payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfil the condition of payment (convertible foreign exchange) and therefore, the denial of refund on this ground is not sustainable - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Rejection of refund claims based on receipt of payment in Indian rupees. 2. Compliance with Rule 3(2)(b) of Export of Service Rules, 2005. 3. Interpretation of Foreign Inward Remittance Certificate (FIRC) and its implications. 4. Applicability of various judicial precedents and FEMA regulations. Issue-wise Detailed Analysis: 1. Rejection of Refund Claims Based on Receipt of Payment in Indian Rupees: The appellant, engaged in providing Information Technology Software Services and Business Auxiliary Services, filed two refund claims under Notification No.5/2006-CE dated 14.3.2006 for input services used in exported services. The Assistant Commissioner of Service Tax rejected these claims, asserting that the export realization was shown in Indian Currency, which was upheld by the Commissioner (A). The appellant argued that the rejection was solely based on the payments being received in Indian rupees, which does not satisfy Rule 3(2)(b) of Export of Service Rules, 2005. However, the appellant contended that the payments in Indian rupees were as per Reserve Bank of India (RBI) permissions and supported by FIRCs issued by the bank. 2. Compliance with Rule 3(2)(b) of Export of Service Rules, 2005: The appellant's consultant submitted that the impugned order was contrary to judicial precedents and that the payments received in Indian rupees should be considered as convertible foreign exchange if routed through a foreign bank. The consultant cited several Tribunal decisions supporting this view, including BNY Mellon International Operations (I) Pvt. Ltd. vs. CCE, Pune-III and CST, Mumbai vs. M/s. PMI Organisation Centre Pvt. Ltd. The Tribunal consistently held that payments received in Indian rupees, routed through foreign banks, satisfy the condition of convertible foreign exchange under Rule 3(2)(b). 3. Interpretation of Foreign Inward Remittance Certificate (FIRC) and Its Implications: The Tribunal noted that FIRCs issued by banks certify that remittances are in convertible foreign exchange. In the appellant's case, the Indian rupee received from the recipient of services through their foreign bank, Silicon Valley Bank of USA, should be treated as convertible foreign exchange. The Tribunal referred to the case of CST vs. PMI Organization Centre Pvt. Ltd., where it was held that payments received in Indian rupees through foreign banks are deemed convertible foreign exchange. 4. Applicability of Various Judicial Precedents and FEMA Regulations: The Tribunal referenced multiple cases, including Sun-Areas Real Estate Pvt. Ltd. vs. CST, Mumbai-I and Nipuna Services Ltd. vs. CCE, which established that payments received in Indian rupees through foreign banks comply with the Export of Service Rules, 2005. The Tribunal also discussed FEMA regulations, which state that payments in rupees from foreign bank accounts are deemed to be in convertible foreign exchange. The Supreme Court's judgment in J.B. Boda and Company further supported this view, indicating that such payments should be treated as foreign exchange. Conclusion: The Tribunal concluded that the impugned orders rejecting the refund claims were not sustainable, as payments received in Indian rupees through foreign banks fulfill the condition of convertible foreign exchange. The orders were set aside, and the appeals were allowed with consequential relief. The operative portion of the order was pronounced in open court on 24/07/2017.
|
