2025 (1) TMI 681 - AT - Service Tax

Refund of service tax paid - services used in connection with the export of goods under Notification No. 41/2007-S.T. dated 06.10.2007 - applicability of time limitation - procedural lapse of filing refund claims beyond the prescribed sixty days - HELD THAT - The refund has been rejected on the procedural ground that the Appellant has filed the refund claim for a particular quarter wherein some of the bills and invoices were dated subsequent to the quarter ending date which is beyond the time limit of 'sixty days' prescribed under Notification No. 41/2007-S.T. dated 06.10.2007. In some cases, the exports had also been made prior to the date of invoice. Accordingly, the ld. adjudicating authority has rejected the refund claims on the ground that these input services could not be related to the goods exported in that quarter. In this regard, it is observed that the Government has realized the difficulties faced by exporters and issued the Notification No. 32/2008-S.T. dated 18.11.2008, extending the time limit of sixty days for filing the refund claim to six months. This beneficial Notification can be applied retrospectively so as to allow refund applications filed within the period of six months from the quarter ending date. The substantial benefit of refund cannot be denied merely on account of non-fulfilment of procedural conditions prescribed under the said Notification. This view has been taken by this Tribunal in the case of COMMISSIONER OF CGST CENTRAL EXCISE, JAMSHEDPUR VERSUS M/S RUNGTA MINES LTD. 2023 (9) TMI 1093 - CESTAT KOLKATA wherein it has been held that the extension of the time limit for filing the refund claim from 60 days to six months being a piece of beneficial legislation, has to be considered as a retrospective amendment. Conclusion - The Appellant is eligible for the refund of input services as claimed by them, as provided under Notification No. 41/2007-S.T. dated 06.10.2007. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the Appellant is entitled to a refund of Service Tax paid on services used in connection with the export of goods under Notification No. 41/2007-S.T. dated 06.10.2007.
Whether the procedural lapse of filing refund claims beyond the prescribed sixty days, but within six months as per subsequent Notification No. 32/2008-S.T., affects the eligibility for such refunds.
Whether the rejection of refund claims based on the timing of invoices and their relation to the export of goods is justified.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Refund under Notification No. 41/2007-S.T.

Relevant Legal Framework and Precedents: Notification No. 41/2007-S.T. exempts Service Tax on services used for the export of goods, with the exemption claimed via refund. The procedural requirement initially mandated filing within sixty days from the quarter's end.
Court's Interpretation and Reasoning: The Tribunal noted that the substantive benefit of refund should not be denied due to procedural lapses. The extension of the filing period to six months by Notification No. 32/2008-S.T. was considered a beneficial amendment applicable retrospectively.
Key Evidence and Findings: The Appellant consistently used services for export, paid Service Tax, and faced delays in receiving invoices, which were beyond their control.
Application of Law to Facts: The Tribunal applied the extended six-month filing period, allowing claims filed within this timeframe. It emphasized that procedural conditions should not override substantive rights.
Treatment of Competing Arguments: The Revenue's argument that claims were time-barred was rejected, as the Tribunal found the extended timeframe applicable and not merely procedural.
Conclusions: The Appellant is entitled to refunds as the claims were filed within the extended period, and the services were indeed used for exports.

Issue 2: Procedural Lapse in Filing Refund Claims

Relevant Legal Framework and Precedents: Notification No. 32/2008-S.T. extended the filing period from sixty days to six months. The Tribunal referenced past decisions supporting the retrospective application of beneficial amendments.
Court's Interpretation and Reasoning: The Tribunal held that the extension of the filing period was a beneficial legislative change that should be applied retrospectively to support exporters.
Key Evidence and Findings: The Appellant's claims were filed within six months, aligning with the extended timeframe. Past Tribunal decisions supported this interpretation.
Application of Law to Facts: The Tribunal applied the retrospective extension, allowing the Appellant's claims, which were initially rejected due to procedural timing.
Treatment of Competing Arguments: The Tribunal dismissed the argument that claims were "dead" due to initial procedural non-compliance, emphasizing the retrospective application of the extension.
Conclusions: The procedural lapse did not invalidate the claims, as the extended timeframe was applicable.

Issue 3: Timing of Invoices and Relation to Exported Goods

Relevant Legal Framework and Precedents: The core issue was whether services rendered after the export could still be considered related to the export under Notification No. 41/2007-S.T.
Court's Interpretation and Reasoning: The Tribunal noted that the timing of invoices should not negate the relationship between services and exports, especially when delays were outside the Appellant's control.
Key Evidence and Findings: The Appellant demonstrated that services were used for exports, and invoice delays were due to service providers.
Application of Law to Facts: The Tribunal found that the services were indeed related to the exports, despite invoice dates, and thus eligible for refunds.
Treatment of Competing Arguments: The Tribunal rejected the argument that post-export invoices severed the service-export relationship, emphasizing the substantive use of services.
Conclusions: The Appellant's claims were valid as the services were used for exports, irrespective of invoice timing.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The substantial benefit of refund cannot be denied merely on account of non-fulfilment of procedural conditions prescribed under the said Notification."
Core Principles Established: Procedural lapses should not override substantive rights, especially when beneficial legislative changes apply retrospectively.
Final Determinations on Each Issue: The Appellant is entitled to refunds for Service Tax paid on services used for exports, with procedural lapses excused due to the retrospective application of the extended filing period.

The Tribunal's decision underscores the importance of substantive justice over procedural technicalities, particularly in the context of export-related tax refunds.

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