2018 (4) TMI 25 - AT - Service Tax

Refund - relevant date - Whether the period of one year for filing the refund should be taken from the date of receipt of foreign exchange i.e. date of FIRC or from the date of invoice? - Held that - in case of export of service, the same qualifies as export only when convertible foreign exchange is received - In the present case, the appellant has admittedly filed the refund claim within one year from the receipt of convertible foreign exchange - the relevant date is the date of FIRC and not the date of service. Whether the remittance received against the export in Indian rupees will be considered as receipt of convertible foreign exchange for the purpose of qualifying the supply of service as export? - Held that - in the case of Sun-Area Real Estate Pvt. Ltd. 2015 (5) TMI 885 - CESTAT MUMBAI in the identical facts, it was held that the Indian rupees received through foreign bank is considered as the payment in convertible foreign exchange. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Determination of the period for filing a refund claim based on the date of receipt of foreign exchange or the date of invoice.
2. Consideration of remittance received in Indian rupees against export as convertible foreign exchange for qualifying the supply of service as export.

Analysis:

Issue 1:
The primary issue in this case revolves around the period for filing a refund claim concerning export transactions. The appellant argued that the date of export should be determined based on the invoice date rather than the date of Foreign Inward Remittance Certificate (FIRC). On the other hand, the respondent contended that the relevant date for filing the appeal under service tax provisions is when the provider of service receives remittance in convertible foreign exchange. The Tribunal analyzed the submissions and referred to the requirement that export of service qualifies only when convertible foreign exchange is received. The Tribunal concluded that the appellant filed the refund claim within one year from the receipt of convertible foreign exchange, making the date of FIRC the relevant date for determining the period for filing the refund claim.

Issue 2:
The second issue pertains to whether remittance received in Indian rupees against export transactions should be considered as convertible foreign exchange for the purpose of qualifying the supply of service as export. The Revenue argued that remittance received in Indian rupees does not meet the criteria of convertible foreign exchange, thus disqualifying the supply of service as an export transaction. However, the respondent contended that even if the remittance was received in Indian rupees, if it was through a foreign bank, it should be considered as payment in convertible foreign exchange. The Tribunal referenced a previous judgment in a similar case and held that Indian rupees received through a foreign bank are considered as payment in convertible foreign exchange, aligning with provisions of the Reserve Bank of India and Foreign Exchange Management Act. Consequently, the Tribunal dismissed the Revenue's appeal and upheld the impugned order, emphasizing that the issue regarding remittance in Indian rupees through a foreign bank as convertible foreign exchange had been conclusively settled in previous jurisprudence.

In conclusion, the Tribunal's decision reaffirms the importance of receiving convertible foreign exchange for qualifying export transactions and clarifies the treatment of remittance in Indian rupees through a foreign bank as meeting the criteria of convertible foreign exchange.