2018 (2) TMI 946 - AT - Service Tax

Refund claim - time limit - Section 11B of the Central Excise Act, 1944 - whether the time limit prescribed under Section 11B in respect of filing of refund claims is to be applied from the date of receipt of payment for export of services or can be considered from the end of the quarter in which such payments have been received? Held that - there is a specific condition that the refund claims are required to be filed within the period specified under Section 11B. Consequently, completely ignoring the provisions of Section 11B may not be appropriate. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provisions constructively so as to give it meaning such that the objective of the provisions; i.e. to grant refund of unutilized CENVAT credit, is facilitated. By reference to the Service Tax Rules, 1994 as well as the successor provisions i.e. the Export of Service Rules, 2005, we note that export of services is completed only with receipt of the consideration in foreign exchange. Consequently, the date of Foreign Inward Remittance Certificate (FIRC) is definitely relevant. In respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis. The matter reverted to the regular Benches for deciding the respective appeals.

Issues Involved:
1. Jurisdiction of Single Member to refer the matter for constitution of Larger Bench.
2. Applicability of Section 11B of the Central Excise Act, 1944 for refund claims under Rule 5 of the CENVAT Credit Rules, 2004.
3. Determination of the "relevant date" for filing refund claims under Rule 5 of the CENVAT Credit Rules, 2004.

Detailed Analysis:

1. Jurisdiction of Single Member to Refer the Matter:
Shri Chidanand Urs, learned counsel, contested the jurisdiction of the Single Member to make a reference for the constitution of a Larger Bench. He argued that in view of the Division Bench's decision in favor of the assesses, the Single Member should follow the same as per judicial propriety. Despite this objection, the Larger Bench proceeded to decide the issue on merit, deeming it fit to bring clarity to the matter.

2. Applicability of Section 11B of the Central Excise Act, 1944:
The core issue was whether the time limit prescribed under Section 11B of the Central Excise Act, 1944, should apply to refund claims under Rule 5 of the CENVAT Credit Rules, 2004. The learned counsel argued that Section 11B specifies a time limit of one year from the "relevant date," but does not explicitly cover export of services. They contended that the period of one year should be considered without focusing on the relevant date. The Tribunal acknowledged that completely ignoring Section 11B would be inappropriate, aligning with the Hon'ble Madras High Court's decision in the case of GTN Engineering, which disagreed with the Hon'ble Karnataka High Court's view in mPortal India Ltd.

3. Determination of the "Relevant Date":
The Tribunal had to decide whether the "relevant date" for filing refund claims should be the date of receipt of payment for export of services or the end of the quarter in which such payments were received. The Tribunal considered the Service Tax Rules, 1994, and the Export of Service Rules, 2005, noting that export of services is completed only with the receipt of consideration in foreign exchange. Therefore, the date of the Foreign Inward Remittance Certificate (FIRC) is relevant.

The Tribunal also considered the amendment in Notification No.27/2012 by Notification No.14/2016, which specified that the relevant date for service providers is the date of receipt of payment in convertible foreign exchange. However, the Tribunal, guided by the Hon'ble Supreme Court's decision in Commissioner of Income-Tax Vs. Vatika Township P. Ltd., concluded that any beneficial amendment should be applied retrospectively, while provisions imposing a burden should be prospective. Consequently, the Tribunal held that for refund claims filed on a quarterly basis, the relevant date should be the end of the quarter in which the FIRC is received.

Conclusion:
The Tribunal concluded that the time limit for filing refund claims under Rule 5 of the CENVAT Credit Rules, 2004, should be considered from the end of the quarter in which the FIRC is received, aligning with the decision in CST, Mumbai-II Vs. Sitel India Ltd. The matter was reverted to the regular Benches for deciding the respective appeals.

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