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2022 (6) TMI 923 - AT - Service TaxRefund of Service Tax paid - Business Support Service - Management and Repair Service - export of services or not - applicability of time limitation - period 2006-07 2007-08 and 2008-09 - HELD THAT - In terms of the distributor agreement, the appellant entered into, the appellants are appointed as distributors. In terms of Clause-2 a, the appellants as distributors as its own expense, exert its best efforts, through advertising and other promotional devices to sell and promote the sale and use of the Products throughout the Territory. Distributor s efforts will include use of facility signage, showroom display kits and other display and advertising materials described in the HAAS Factory Outlet manuals, Distributors shall obtain the prior approval of HAAS for any advertising and promotional materials not prepared by HAAS, which approval shall not be unreasonably withheld or delayed. Tte appellants have no case on merits as far as machine commissioning charges and office expenses are concerned. There is no clause in the agreement about the payment of commissioning charges and office expenses though as a distributor the payment of commission is understandable. Moreover, liability to service tax does not depend only on the wordings of the agreement and the essence of the agreement needs to be considered provided the other aspects of levy are decided. In case of machine commissioning charges, the appellant is a service provider and the Indian purchaser of the machine is the service recipient. The appellant may have rendered the service as an agent of his overseas principals and may have received the consideration from them towards such service. Service Tax being Destination Based Consumption Tax , as the service is rendered and consumed in the country, the service cannot be said to have been exported. For this reason, the contentions of the appellants are not acceptable. Reimbursed office expenses - HELD THAT - There are no service aspect in the same. Even if one assumes that it is a service rendered by the appellant, it is a service rendered to themselves. Therefore, the service tax is not leviable. Commission received by the appellants - HELD THAT - There is an element of service and the same appears to have been rendered to the overseas principals. Time Limitation - HELD THAT - Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT has categorically held that all refunds are governed by the provisions of Section 11B - Hon ble Madras High Court in a recent judgment in the case of M/S. M.G.M. INTERNATIONAL EXPORTS LTD. VERSUS THE ASSISTANT COMMISSIONER OF SERVICE TAX, CHENNAI 2021 (4) TMI 1167 - MADRAS HIGH COURT held that the refund of tax if any borne by the petitioner had to be made only within a period of limitation prescribed under Section 11B of the Central Excise Act, 1944 . Appeal allowed in part.
Issues Involved:
1. Whether the services rendered by the appellants can be considered as export of services. 2. Whether the refund claims are hit by limitation. Issue-wise Detailed Analysis: 1. Export of Services: The appellants, M/s Manav Marketing Private Limited, engaged in providing 'Business Support Service' and 'Management and Repair Service', claimed that the services rendered by them are export of services and are not liable to service tax. They filed refund claims for Rs.62,40,422/- and Rs.35,63,543/- for the years 2006-07, 2007-08, and 2008-09, which were rejected on merits and limitation grounds. The appellants argued that the sales commission received in foreign exchange is export of services as per Circulars No.111/05/2009-ST dated 24.02.2009. The Department, however, contended that the activities were not export and the refund claims were time-barred. The Original Authority found that the services provided were machine commissioning charges, office maintenance charges, and commission, which were performed within India, thus not qualifying as export of services under Rule 3(1)(ii) of Export of Rules, 2005. 2. Limitation: The appellants argued that the refund application was filed within time, considering the circular issued on 24.02.2009 and the audit conducted on 21.03.2009. The Department maintained that all refunds are governed by Section 11B of the Central Excise Act, 1944, as upheld by the Apex Court in Mafatlal Industries Ltd. Vs UOI- 1997 (89) ELT 247 (SC). The Tribunal agreed with the Department, citing that refunds must adhere to the limitation period prescribed under Section 11B. Judgment: The Tribunal considered the distributor agreement and the nature of services provided. It found that the services rendered by the appellants, primarily machine commissioning charges, were performed within India and did not qualify as export of services. The Tribunal noted that the appellants did not counter the Department's claim on this count and focused mainly on the limitation argument. The Tribunal concluded that: - Payment of Service Tax on 'Machine Commissioning Charges' is in order, and no refund is entitled on this ground. - The appellants are not required to pay Service Tax on 'Office Expenses' and 'Commission'. - The matter is remanded back to the Original Authority to examine if any refund is due on 'Office Expenses' and 'Commission', subject to limitation and admissibility. - The miscellaneous applications for additional evidence are disposed of. Order Pronounced: The appeals are partly allowed and partly dismissed, with specific directions for further examination by the Original Authority. The judgment was pronounced in the Open Court on 14/06/2022.
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