2019 (7) TMI 398 - AT - Service Tax

Rebate of Swachch Bharat Cess - input services used for providing output services which have been exported - rebate denied on the ground that the appellant has not complied with the condition 2(e) of the Notification No.39/2012 read with Notification No.03/2016 - HELD THAT - It is an admitted fact that the appellant has not claimed any CENVAT credit on input and input services on which rebate has been claimed and the original authority while sanctioning the rebate has examined this issue and has categorically held that the appellants have not availed any CENVAT credit on input and input services on which rebate has been claimed - the Commissioner(Appeals) has wrongly interpreted the condition contained in para 2(e) in isolation without reading the whole sentence and has wrongly allowed the Departmental appeals. Since the appellants have not claimed any CENVAT credit on the amount for which the rebate has been claimed, the impugned orders are not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Rebate claims on Swachch Bharat Cess for different periods
- Interpretation of Notification No.39/2012 and Notification No.03/2016
- Compliance with conditions for rebate eligibility
- Departmental appeals challenging rebate claims
- CENVAT credit on input services claimed for rebate

Analysis:

The appellants, engaged in various services, filed rebate claims for Swachch Bharat Cess paid on input services used for exported output services, as per Notification No.39/2012 amended by Notification No.03/2016. The adjudicating authority allowed all rebate claims, stating compliance with conditions. However, the Department filed appeals, alleging non-fulfillment of condition 2(e) of Notification No.39/2012, leading to the Commissioner(Appeals) allowing the Department's appeals.

The consultant for the appellant argued that the impugned order failed to interpret Notification No.39/2012 correctly. He highlighted that the rebate was granted after fulfilling all conditions and that the Department appealed only for three quarters, not challenging other rebate sanctions. The purpose of the rebate was to prevent tax exportation, and as the appellants didn't claim CENVAT credit on Swachch Bharat Cess, they should be entitled to the rebate.

On the contrary, the Assistant Commissioner defended the impugned order. The Tribunal, after hearing both sides and examining the records, noted that the appellants hadn't claimed CENVAT credit on the input services for which rebate was sought. The Commissioner(Appeals) misinterpreted condition 2(e) and allowed Departmental appeals without considering the entire context. Notably, the Department didn't appeal against rebates granted for other quarters. As the appellants met the conditions and didn't claim CENVAT credit on the rebate amount, the Tribunal found the impugned orders unsustainable in law and allowed the appeals, setting aside the Department's appeals.

In conclusion, the Tribunal ruled in favor of the appellants, emphasizing compliance with rebate conditions and the non-claim of CENVAT credit on the input services for which the rebate was claimed. The judgment highlighted the importance of correct interpretation of legal provisions and ensuring fair application of rebate regulations.