Refund cannot be denied for delayed service tax registration where exported services were not taxable

An exporter of services not liable to pay service tax on exported output services is not required to obtain compulsory registration under Section 69 of the Finance Act, 1994 and Rule 4(1) of the Service Tax Rules, 1994. Refund of input service tax cannot be denied solely because registration was obtained later, since the registration obligation applies only to persons liable to pay service tax. A nominal penalty for failure to register does not by itself defeat an otherwise admissible refund claim. The refund issue must therefore be examined on its merits rather than rejected only for delayed registration.

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Issues: Whether an exporter of services, not liable to pay service tax on its output services, was bound to obtain registration before claiming refund of input service tax, and whether refund could be denied solely on the ground of delayed registration.

Analysis: Registration under Section 69 of the Finance Act, 1994 and Rule 4(1) of the Service Tax Rules, 1994 is required only for a person liable to pay service tax. Where the entire output service is exported and no service tax is payable, compulsory registration is not mandated. The possibility of a nominal penalty for failure to register does not justify denial of a refund claim if the refund is otherwise admissible.

Conclusion: The denial of refund merely because registration was obtained later was unsustainable, and the matter had to be reconsidered by the original authority on the merits of the refund claim.

Ratio Decidendi: A refund of input service tax cannot be denied solely for want of prior registration when the claimant was not liable to pay service tax on the exported output services, since the registration obligation applies only to persons liable to pay service tax.

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