2023 (5) TMI 762 - AT - Service Tax

Refund claim - service tax paid on technical inspection and certification services, much before 01.07.2017 - Post GST era - applicability of N/N. 41/2012-ST - HELD THAT - The notification does not provide for any limitation on the period in which the goods have to be exported from the date of receipt of the input service on the payment of service tax. Impugned order does not analyze the notification in dispute but has misdirected itself by going into the transitional provisions as per the Central Goods and Service Tax Act, 2017. From the plain wording of the notification it is evident that the right to claim the rebate has accrued to the appellant (exporter) on the date of payment of the service tax on input services received by him for use in the export of goods. Assistant Commissioner has in para 5 (iii) recorded a specific finding in this regard which was not disputed by the revenue in their appeal before the Commissioner (Appeal) nor Commissioner (Appeal) has recorded any finding to this effect. In the case of Eicher Motors Ltd. 1999 (1) TMI 34 - SUPREME COURT , Hon ble Apex Court held that it becomes clear that a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. The observation made by the Commissioner (Appeals) in respect of the provisions of Section 173 of The Central Goods and Service Tax Act, 2017, are in respect of the repeal of notification 41/2012-ST without even referring to the Section 174(2) ibid, cannot impact the rights accrued to the appellant prior to such repeal. As is evident from the wording of the notification and the decision of the Hon ble Supreme Court the right to rebate has accrued to the appellant at the time of the receipt of the specified input services for use in the export of goods by the exporter, and such right could not have been extinguished by the subsequent event of repeal of Chapter V of the Finance Act, 1994. Impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Applicability of Notification No 41/2012-ST post-GST implementation.
2. Legitimacy of refund claims under repealed Notification No 41/2012-ST.
3. Interpretation of Section 142(4) and Section 174(2) of the CGST Act, 2017.
4. Jurisdiction of the Assistant Commissioner in sanctioning refunds under the repealed notification.

Issue-wise Detailed Analysis:

1. Applicability of Notification No 41/2012-ST post-GST Implementation:
The appellant filed refund claims under Notification No 41/2012-ST dated 29.06.2012, for service tax paid on technical inspection and certification services before the GST regime commenced on 01.07.2017. The Assistant Commissioner sanctioned a partial refund under this notification. However, the Revenue challenged this decision, arguing that the notification ceased to be applicable post-GST implementation. The Commissioner (Appeals) upheld this view, stating that refund claims filed after 01.07.2017 should be processed under the CGST Act, 2017, as the notification was repealed.

2. Legitimacy of Refund Claims under Repealed Notification No 41/2012-ST:
The Assistant Commissioner found that the refund claims were in accordance with Notification No 41/2012-ST, which provided for a rebate of service tax paid on specified services used for export of goods. The claims were filed within the stipulated time and met all conditions of the notification. The Commissioner (Appeals), however, held that since the claims were filed post-GST implementation, they should be governed by the CGST Act, 2017, not the repealed notification.

3. Interpretation of Section 142(4) and Section 174(2) of the CGST Act, 2017:
The appellant argued that their right to a refund accrued under the existing law (Finance Act, 1994) should not be affected by the introduction of GST. They cited Section 142(4) of the CGST Act, which states that claims for refunds filed after the appointed day should be disposed of in accordance with the existing law. The Commissioner (Appeals) interpreted "existing law" to mean the CGST Act, 2017, post-GST implementation, thus rejecting the refund claims under the repealed notification. The Tribunal, however, emphasized that the right to claim a rebate accrued when the service tax was paid, and such a right could not be extinguished by the subsequent repeal of the notification.

4. Jurisdiction of the Assistant Commissioner in Sanctioning Refunds under the Repealed Notification:
The Assistant Commissioner sanctioned the refund claims based on the provisions of Notification No 41/2012-ST, finding that all conditions were met and the claims were filed within the time limit. The Tribunal supported this view, stating that the right to a refund accrued at the time of payment of service tax and could not be nullified by the repeal of the notification. The Tribunal cited precedents from the Supreme Court and High Courts, affirming that accrued rights under the existing law are protected even after the repeal of the law.

Conclusion:
The Tribunal allowed the appeals, holding that the right to claim a rebate accrued when the service tax was paid, and this right could not be extinguished by the repeal of Notification No 41/2012-ST. The Tribunal set aside the impugned order of the Commissioner (Appeals), thereby upholding the Assistant Commissioner's decision to sanction the refund claims under the repealed notification. The Tribunal emphasized that the accrued rights under the existing law are protected by Section 174(2) of the CGST Act, 2017.