2017 (12) TMI 720 - AT - Service Tax

Refund claim - denial on the ground that the FIRCs contains an address different from that of claimant STPI and also the FIRCs records the remittances received as advance and therefore, the receipt of remittances cannot be correlated - Held that - it is not the case of the department that the appellant has not exported the service whereas the appellant has proved that there has been export of service and FIRCs have been received in advance, which has been accounted for in the books of accounts. Further, they have also produced the certificate of Chartered Accountant to the effect that the remittances were received. Further, I find that when the service was rendered, there was no objection by the department that the said service is not an export of service and they have raised the objection only when the refund was claimed. Further, I find that the allegation that FIRCs only talks about advance and thus, the correlation cannot be done is untenable when the exporter has declared that FIRCs are towards the export effected and that the foreign inward remittances has been received, which is not in question or doubt - refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Refund of service tax paid on input services used in the export of software; Rejection of refund claims by the adjudicating authority based on discrepancies in FIRCs; Compliance with Export of Service Rules, 2005; Appeal against the rejection of refund claims.

Analysis:
1. Refund Rejection based on FIRCs Discrepancies: The appellant, a 100% EOU, sought refunds of service tax paid on input services used in software export. The adjudicating authority rejected the refunds citing discrepancies in the FIRCs, where remittances were recorded as advances. The authority held that the remittances could not be correlated to exports, thus not meeting Rule 3(2) of Export of Service Rules, 2005.

2. Common Order for Multiple Appeals: Since the issue was identical in all five appeals, they were disposed of through a common order. The appeals covered different periods, with refund amounts ranging from Rs. 4,74,574 to Rs. 10,86,523.

3. Appellant's Arguments: The appellant contended that the impugned order contravened legal provisions and previous Tribunal decisions. They argued that the assessment of compliance with Export of Service Rules should not occur during refund applications, and discrepancies were contrary to the department's initial stance. The appellant highlighted the acceptance of remittances by RBI and STPI, supported by a Chartered Accountant's certification of remittance receipt.

4. Department's Stand: The AR supported the impugned order's findings, emphasizing the lack of correlation statement and proof of one-to-one correlation.

5. Judgment: The Tribunal noted that the department did not dispute the export of services by the appellant. The appellant demonstrated service export, advance receipt of FIRCs, and proper accounting. The Chartered Accountant's certification further validated remittance receipt. The Tribunal found the objection to FIRCs' advance nature baseless, as the appellant declared them for exports with confirmed foreign remittances. The impugned order was deemed legally unsustainable, leading to the allowance of all appeals for refund.

This judgment emphasizes the importance of substantiating claims with proper documentation and adherence to statutory rules while highlighting the need for a consistent approach by the authorities in assessing refund applications.