2010 (9) TMI 294 - AT - Service Tax

Tribunal grants appeal for service tax refund on exported services, emphasizing substantive benefits over procedural lapses.

The Tribunal allowed the appeal in a case concerning a refund claim under Notification No. 12/2005-S.T. for service tax paid on input services used in ... Rebate – export of service - service tax paid on input services used in the services exported - refund claim has been rejected on the ground that appellant did not file the declaration prior to the export of service - requirement of filing declaration has been given under the heading procedure in the notification. Item No. 2 of the notification provides for conditions and limitations and item No. 3 of the notification gives the procedure for claiming the refund - view taken by the Tribunal that procedural requirement cannot be used to deny a substantive benefit, the appeal filed by the appellant is allowed and the impugned order is set aside Issues:Refund claim under Notification No. 12/2005-S.T. for service tax paid on input services used in exported services. Interpretation of the notification regarding the requirement of filing a declaration prior to export. Whether procedural lapses can deny substantive benefits. Applicability of previous Tribunal decisions and Supreme Court judgments in similar cases.Analysis:The appellants sought a refund under Notification No. 12/2005-S.T. for service tax paid on input services used in exported services. The notification required a declaration to be filed prior to export, detailing duty/tax payable on inputs and services. The refund claim was rejected as the declaration was submitted after the export period. The Chartered Accountant argued that procedural lapses should not deny substantive benefits, citing Tribunal decisions supporting this view. The Departmental Representative contended that the declaration requirement was substantive, referring to Supreme Court judgments emphasizing strict interpretation of exemption notifications.The Member analyzed the notification, distinguishing between conditions and procedures. Referring to Tribunal decisions like CST, Delhi v. Convergys India Pvt. Ltd., it was noted that procedural lapses should not deny substantive concessions, especially in export-related cases. The Member disagreed with the applicability of the Supreme Court judgments cited by the Departmental Representative, as the notification in question had a clear division between conditions and procedures. The appeal was allowed, setting aside the impugned order, but remanded the matter to the original adjudicating authority for further consideration on the eligibility for refund beyond procedural lapses.In conclusion, the Tribunal held that procedural requirements should not be used to deny substantive benefits, especially in cases of export-related benefits. The analysis focused on the interpretation of the notification, distinguishing between conditions and procedures, and emphasized the importance of considering the substantive eligibility for benefits beyond mere procedural compliance. The decision was based on precedent Tribunal rulings and the specific language and intent of the notification in question, rather than general principles from Supreme Court judgments.