2018 (5) TMI 1460 - AT - Service Tax

Refund of service tax paid - input services used in the export of goods - time limitation - even though the refund claim was filed within 6 months from the stipulated date i.e. from the date of the exported goods, but, it was disallowed on the ground that the payment of service tax on reverse charge mechanism was effected on 07.05.2009 - Held that - the department has not rejected the refund claim and returned the same to the appellant for deficit of document, namely, proof of payment of service tax, after it was filed on 16.3.2016. The refund claim cannot be rejected on the ground of time bar, since, they have complied with the condition of filing the refund claim within 6 months from the date of export of goods for the relevant quarter i.e. from July 2008 to Sept. 2008 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against rejection of refund claim for service tax paid on input services used in export of goods - Compliance with time limit for filing refund claim - Exemption under Notification No. 41/2007-ST dated 06.10.2007 - Disallowance based on payment date of service tax on reverse charge mechanism.

Analysis:

1. Compliance with Time Limit for Filing Refund Claim:
The appellant filed a refund claim for service tax paid on input services used in the export of goods for the quarter July 2008 to Sept. 2008. The claim was filed on 16.03.2009, within the 6-month period stipulated under Notification No. 41/2007-ST dated 06.10.2007. The department objected to the refund claim, citing that the payment of service tax on reverse charge mechanism was made on 07.05.2009, after the filing of the claim. However, the Tribunal noted that the refund claim was filed within the prescribed time limit from the date of export of goods, and as the department did not reject the claim due to any deficiency, the claim could not be rejected solely on the ground of being time-barred.

2. Exemption under Notification No. 41/2007-ST dated 06.10.2007:
The Tribunal observed that the Notification exempts taxable services used for the export of goods from the service tax leviable under relevant sections of the Finance Act, 1944. In this case, the appellant exported goods and utilized the sales commission service on which service tax was paid. The refund claims were filed within the specified time frame. The Tribunal emphasized that the objection raised by the department regarding the payment date to the overseas sales commission agent being after the filing of the claim did not invalidate the compliance with the conditions of the Notification. The Tribunal held that since the conditions for filing the refund claim within 6 months from the date of export were met, the claim could not be rejected based on timing issues.

3. Disallowance Based on Payment Date of Service Tax on Reverse Charge Mechanism:
The department contended that the refund claim was time-barred due to the payment date of service tax on reverse charge mechanism being after the filing of the claim. However, the Tribunal found that the crucial factor was the timely submission of the refund claim within the prescribed period from the date of export. As the appellant had complied with this requirement, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the refund claim could not be rejected solely on the ground of being time-barred.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting their compliance with the time limit for filing the refund claim and the exemption provided under Notification No. 41/2007-ST dated 06.10.2007 for taxable services used in the export of goods. The Tribunal emphasized that the department's objection based on the payment date of service tax did not invalidate the timely filing of the claim, leading to the allowance of the appeal.