2024 (7) TMI 998 - AT - Service Tax

Refund claim - refund claim was rejected by the adjudicating authority holding that the impugned service cannot be deemed to have been covered by the negative list in section 66D of Finance Act 1994 nor exempted by the said notification in this case - HELD THAT - All the documents reproduced except MOU are referred in the show cause notice. MOU has been produced by the appellant along with their appeal filed and have been relied by them for claiming that the burden of tax has not been passed on to the service recipient at time of hearing. From the documents, it is quite evident that appellant had been providing services only to SOLCIL for which they raised invoices on them and received payment from them. They were providing the services as business associate of SOLCIL and were paying the service tax after obtaining registration under the category of business auxiliary service. Neither the entry at Sl. No 9 in the Notification No 25/2012-ST nor the Circular No 172/7/2013, provides for any exemption or clarifies in respect of the Business Auxiliary Services Provided by the appellant to their service recipient i.e. SOLCIL. Both the service provider and service recipient are located in taxable territory and thus the service tax has been correctly levied on the services provided by the appellant to SOLCIL. Appellant has not provided any services in nature of auxiliary education services to any educational institution either in India or outside, for claiming the benefit of exemption under Notification No 25/2012-ST (S No 9). Both the authorities have concluded that the exemption claimed by the appellant is not admissible to them. Appellant has not come with clarity to specify the reason for claiming the exemption and refund even in the appeal filed. As observed earlier service tax is transaction based levy and should be determined only after examining the terms of agreement between the service provider and service recipient - Appellant having failed to clarify in respect of exact nature of transaction before the authorities below, there are no perversity or illegality in rejection of the refund claim filed. The impugned order upheld rejecting the refund claim filed by the appellant.

Issues Involved:
1. Eligibility for Refund Claim
2. Applicability of Exemption under Notification No. 25/2012-ST
3. Nature of Services Provided
4. Compliance with Section 11B of the Central Excise Act, 1944
5. Passing of Service Tax Burden to Service Recipient

Issue-wise Detailed Analysis:

1. Eligibility for Refund Claim:
The appellant, a registered service provider for Business Auxiliary Services, filed a refund claim of Rs. 5,74,070/- along with challans evidencing the deposit of service tax. The claim was based on the assertion that their services related to the admission of students in professional colleges in China were exempt from service tax as per Circular No. 172/7/2013-ST dated 19.09.2013 and Notification No. 25/2012-ST dated 20.06.2012. However, the adjudicating authority rejected the refund claim, stating that the impugned service was neither covered by the negative list in section 66D of the Finance Act, 1994 nor exempted by the said notification.

2. Applicability of Exemption under Notification No. 25/2012-ST:
The appellant argued that their activities of counseling students for admission to educational institutions were covered under the definition of auxiliary educational services, which are exempt from service tax under entry No. 9(a) of Notification No. 25/2012-ST dated 20.06.2012. The impugned order was challenged on the grounds that it misconstrued this entry, which does not specify that the exemption would not be available if the educational institution is located outside the taxable territory. The order-in-original acknowledged that Chinese medical universities and colleges are outside the purview of the Finance Act, 1994.

3. Nature of Services Provided:
The adjudicating authority and the Commissioner (Appeal) found that the appellant failed to clarify the nature of their services and the arrangement with the service recipient, SOLCIL. The appellant provided services to SOLCIL for counseling students seeking admission to Chinese universities and raised invoices on SOLCIL. The services were provided as a business associate of SOLCIL, not directly to the students or educational institutions. The authorities concluded that the services provided did not qualify as auxiliary educational services exempt under Notification No. 25/2012-ST.

4. Compliance with Section 11B of the Central Excise Act, 1944:
The refund claim was partly considered time-barred as per Section 11B of the Central Excise Act, 1944. The appellant did not provide the required documents to establish that the service tax paid had not been passed on to the service recipient. The adjudicating authority noted that the appellant failed to specify the applicable provisions of the exemption notification and the precise content of the CBEC Circular referred to.

5. Passing of Service Tax Burden to Service Recipient:
The appellant claimed that they had not passed on the burden of the service tax to SOLCIL, supported by a certificate from SOLCIL. However, the adjudicating authority found the evidence insufficient, as the appellant did not comply with requests for original taxpaying documents, bank confirmation, and other relevant documents. The authorities concluded that the appellant had not clarified the exact nature of the transaction and failed to establish the admissibility of the exemption and refund claim.

Conclusion:
The Tribunal upheld the impugned order, rejecting the refund claim filed by the appellant. It was held that the appellant had rightly paid the service tax due and was not entitled to a refund. The appeal was dismissed, and the findings of the lower authorities were affirmed. The Tribunal found no merits in the other issues raised by the appellant, including the issue of limitation. The decision was pronounced in open court on 15 July 2024.

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