2021 (12) TMI 848 - AT - Service Tax

Refund of service tax - condonation of delay in filing of claim - carrying out authorized operations in their SEZ unit - service tax paid under reverse charge mechanism for the taxable services received for carrying out authorized operations in SEZ - refund of service tax distributed to SEZ Unit under ISD Invoices under Rule 7 of Cenvat Credit Rules, 2004 - Para 3 (III)(e) of Notification No.12/2013-ST - HELD THAT - As regard the issue that the respondent is required to file only one refund claim for each quarter in terms of Clause (f) of Para 3 (III) of the notification, firstly, the respondent have admittedly filed only one refund claim for each quarter therefore, it cannot be said that the respondent have filed more than one claim in each quarter. Secondly in the facts that the respondent have filed refund claim in quarter July 2017 to September 2017 which includes the claim of the invoices which are for the period from August 2013 to October 2017 even if, it is assumed that the refund claim for the part of the invoices which were pertaining to earlier quarter filed in the quarter July 2017 to September 2017 only on this ground, refund cannot be denied. It is settled law that discretion exercised by a statutory authority who is empowered to exercise such discretion cannot be interfered with lightly or routinely. The mere fact that the committee of Commissioners found the reasons assigned to be not convincing, without any basis it is not sufficient for filing a review as the reasons given in exercise of its statutory powers of exercising discretion. In the grounds of appeal there is no averment by the revenue that the reasons assigned suffer from any perversity or are premised on non-existent facts so as to warrant interference with the exercise of the discretion - In the present case it is not only the Deputy Commissioner who has extended the period by recording the reasons but the learned Commissioner (Appeals) also endorsed the said reasoning. As per the ground of appeal of the revenue, the main contention is that the respondent have not complied with the contention of Para 3(III)(e) of the Notification No.12/2013-ST in as much as the refund claim in case of refund claimed under Table-II of Form A-4 of Notification, the refund claim was filed beyond one year from the date of actual payment of service tax made by the respondent to the registered service provider. In the present case there is no dispute that the respondent has filed the refund claim within one year from the date of ISD Invoices. It is clear that without the ISD Invoices, refund cannot be filed. As per the format of Table-II in such case it is impossible to file a refund claim from the date of actual payment of service tax to the service provider therefore, the condition prescribed under clause (e) of Para 3 (III) is applicable only in respect of Table-I of Form A-4 - clause 3(III)(e) of Notification No.12/2013-ST is not applicable in respect of refund claim made on the basis of ISD Invoice in Table-II of Form A-4 apended to the said notification. As per the condition Para 3(III)(e) of notification, the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made by such developer or SEZ Unit to the registered service provider. From this condition, it is mandatory that the payment of service tax has to be made by the SEZ Unit. In the present case, only the services covered under the Invoices which are exclusively used by the SEZ Unit and refund of which claimed under Table-I payment of service tax is directly made by the SEZ to the service provider. However, in case all the services which are attributed to the SEZ Unit as well as DTA Unit of the respondent company the payment was made by the Head Office of the respondent SEZ Unit and the credit related to service attributed to the SEZ unit was distributed through ISD Invoice to the respondent s SEZ Unit - Legislators intention is very clear that one year period is applicable only in case of payment directly made by SEZ Unit and not in a case where the Head Office of the SEZ unit is making the payment. In the case of expenses of all services received by SEZ Unit can be ascertained only on the basis of input service distribute invoices, on the basis of which the SEZ unit s books of accounts can be maintained properly and correctly therefore, the ISD Invoice is the only document for all the purposes for the SEZ Units - The words used in clause (e) of Para (III) of notification that prescribes one year from the date of payment by the SEZ Unit should be construed directly and according to which the one year period for filing refund shall apply only in case where the payment is directly made by SEZ Unit for which Table-II is prescribed for claiming the refund in that condition (e) shall be applied in case of refund made in Table-II of Form A-4 accordingly, the condition of Para 3(III)(e) of notification is clearly not applicable in case of refund claim made by the respondent in Table-II of Form A-4 apended to the notification. In the present case, the main issue is that there is a delay in filing the refund claim which as per the department is in violation of Clause (e) of Para 3 (III). This being a procedural lapse cannot be the ground for denying the substantial benefit of the exemption notification which is granted by way of refund of service tax in the SEZ - it is settled that in case of violation of condition of the notification which is in the nature of procedural lapse, the substantial benefit of the exemption notification cannot be denied. Even though there is a delay the same was condoned by the lower authority - there are no infirmity in the impugned order. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Multiple refund claims for each quarter.
2. Condonation of delay beyond one year.
3. Verification of distribution of Cenvat Credit.
4. Interpretation of exemption notification conditions.

Issue-wise Detailed Analysis:

1. Multiple Refund Claims for Each Quarter:
The revenue argued that the respondent filed more than one refund claim per quarter, violating Para 3(III)(f) of Notification No.12/2013-ST. The respondent contended they filed only one refund claim per quarter, including claims for invoices from earlier periods within the quarter of July 2017 to September 2017. The tribunal found that the respondent filed only one refund claim per quarter and cited past judgments (SRF Limited, Western Cans P. Ltd., and Chamundi Textiles) supporting that refund claims for invoices of earlier quarters filed in subsequent quarters are permissible. Thus, the tribunal ruled that the respondent did not violate the notification conditions.

2. Condonation of Delay Beyond One Year:
The revenue challenged the validity of reasons for condoning the delay beyond one year as required by Para 3(III)(e) of Notification No.12/2013-ST. The tribunal found that the Deputy Commissioner validly exercised discretion due to the voluminous documentation involved (1255 volumes, 33,400 ISD invoices). The tribunal cited past orders and judgments (Collector, Land Acquisition, Anantnag vs. Mst. Katiji, P.B. Devaswom vs. Bhargavi Amma) supporting a liberal approach to condonation of delay, emphasizing that procedural lapses should not deny substantial benefits. The tribunal upheld the Deputy Commissioner's decision to condone the delay.

3. Verification of Distribution of Cenvat Credit:
The revenue argued that the Deputy Commissioner did not verify the correctness of the distribution of Cenvat Credit between the DTA Unit and the SEZ Unit. The tribunal found that the respondent provided complete turnover details certified by a Chartered Accountant, and the Range Superintendent submitted a verification report. The tribunal noted that no show-cause notice was issued disputing the correctness of the distribution, and past tribunal orders (Commissioner of Central Excise and Service Tax vs. Reliance Industries Ltd.) supported the respondent's compliance. Thus, the tribunal rejected the revenue's contention.

4. Interpretation of Exemption Notification Conditions:
The revenue contended that the refund claims filed beyond one year from the actual payment of service tax violated Para 3(III)(e) of Notification No.12/2013-ST. The tribunal clarified that this condition applies only to refunds under Table-I of Form A-4, where SEZ units directly pay service providers. For refunds under Table-II (common services distributed via ISD invoices), the tribunal found that the condition does not apply, as the SEZ unit cannot file claims without ISD invoices. The tribunal emphasized that procedural lapses should not deny substantial benefits, citing the Supreme Court judgment in Government of Kerala vs. Mother Superior Adoration Convent. The tribunal ruled that the respondent complied with the notification conditions and upheld the refund claims.

Conclusion:
The tribunal upheld the respondent's refund claims, rejecting the revenue's appeal on all grounds. The tribunal emphasized a liberal interpretation of procedural conditions, ensuring substantial benefits are not denied due to procedural lapses. The tribunal's decision aligns with past judgments and legal principles favoring a harmonious interpretation of exemption notifications and Cenvat Credit Rules.