2008 (3) TMI 81 - AT - Service Tax

Refund of unutilized Credit on input services, in case of Export of Services refund denied on ground that provision of refund under Export of Services introduced only w.e.f. 14/03/06 - held that any claim filed after 14/03/06, even for earlier period, cannot be turned down if the claim satisfies other requirements - held that substituted Rule 5 will be applicable for the export of services prior to 14/03/06 refund is subjected to fulfillment of conditions of not. 5/06, so matter remanded

Summary

Issues:
Rejection of refund claim based on the applicability of Rule 5 of the Cenvat Credit Rules 2004 for export of services prior to 14/03/2006.

Analysis:
The case involved two appeals challenging the rejection of a refund claim by the lower authorities. The appellants, engaged in exporting taxable services, had availed Cenvat credit on input stage services. The refund claim was rejected on the grounds that Rule 5 of the Cenvat Credit Rules 2004, which allowed for such refunds, came into effect from 14/03/2006. The Ld. Commissioner (Appeals) upheld the rejection, stating that the benefit of refund to exporters of output services was only available after the amendment on 14/03/2006, citing the principle that exemption notifications cannot be stretched to produce unintended results. The Ld. Counsel, however, argued that a Division Bench of the Tribunal had held that the substituted Rule 5 would apply even for exports made prior to 14/03/2006.

The Division Bench's ruling stated that any claim filed after 14/03/2006, even for an earlier period, cannot be rejected if it satisfies other requirements, as the substituted Rule 5 did not specify that it would only apply to exports made after 14/03/2006. The ruling emphasized that a statute cannot be treated as retrospective solely because it relates to past actions, and that a prospective benefit based on antecedent facts does not make a provision retrospective. Referring to legal principles and Supreme Court decisions, the ruling clarified that statutes conferring prospective benefits do not necessarily have retrospective effects. The Member (Judicial) found the Division Bench's decision binding and set aside the impugned order, directing a review of the refund claim based on the conditions laid down in Notification No. 05/2006.

In conclusion, the impugned order rejecting the refund claim was set aside, and the matter was remanded to the lower authorities for a review based on the conditions specified in the relevant notification. The decision highlighted the importance of interpreting statutory provisions in line with legal principles and precedent, ensuring that prospective benefits are not denied based on the timing of the claim.