High Court rules against Service Tax refund on goods transferred to merchant-exporter pre-export

The High Court of Bombay dismissed the appeals regarding the refund of Service Tax under Section 35G of the Central Excise Act. The court found that since the title to the exported goods had been transferred to the merchant-exporter before export, the appellant was not entitled to relief. No Substantial Questions of Law were identified, and the issue of the merchant-exporter's entitlement for potential refund was left to be determined by competent authorities. The appeals were dismissed without costs.

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Issues involved: Determination of entitlement to refund of Service Tax u/s 35G of the Central Excise Act based on the transfer of title to exported goods to a merchant-exporter before export.

Summary:

The High Court of Bombay heard the respective counsels regarding the transfer of title to exported goods by the appellant to the merchant-exporter, who then effected the export and received payment from the ultimate purchaser. The appellant had paid the Service Tax in question. The appellant's counsel argued for a broader definition of exporter and referred to a Departmental Circular and the concept of sale under the Central Sales Tax Act, 1956. The Asstt. Solicitor General supported the impugned order, stating that since the title had passed to the merchant-exporter before export, the appellant was not entitled to relief.

The Court noted that the title had indeed been transferred to the exporter before export, rendering previous judgments irrelevant. Consequently, no Substantial Questions of Law were found to arise under Section 35G of the Central Excise Act. The Court did not delve into the entitlement of the merchant-exporter, leaving it to be addressed by the competent authorities. The appeals were dismissed with no costs incurred.

In conclusion, the High Court of Bombay dismissed the appeals concerning the entitlement to refund of Service Tax u/s 35G of the Central Excise Act, as the title to the exported goods had been transferred to the merchant-exporter before export, leading to the appellant being deemed ineligible for relief. The Court highlighted the lack of Substantial Questions of Law and deferred the consideration of the merchant-exporter's entitlement for potential refund to the competent authorities.

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