2011 (9) TMI 473 - AT - Service Tax

Tribunal overturns Commissioner's order disallowing rebate claim, citing lack of evidence and improper application of unjust enrichment.

The Tribunal allowed the appellant's appeal, setting aside the Commissioner's order that disallowed the rebate claim. The Tribunal found the reasons for ... Rebate under Rule 5 - Held That:- Rebate cannot be disallowed for delay in filing Notification 12/2005, In view of CST v. Convergys India (P.) Ltd. (2010 (8) TMI 47 - PUNJAB AND HARYANA HIGH COURT), rebate was admissible. - The judgement of Hon'ble Supreme Court in the case of Cadila Laboratories (P.) Ltd. (2001 (11) TMI 94 - SUPREME COURT OF INDIA), relied upon by the department is not applicable to the facts of this case, when there is substantial compliance with the provisions of Notification No. 12/2005-ST regarding the procedure to be followed for claiming the rebate. Rebate claim along with requisite evidence - co-relation between the export invoices and the FICRs - Held That:- Just because FICRs do not bear the export invoice numbers, it cannot be concluded that the same do not pertain to the service provided by the appellant to their client abroad. Advertisement service, Chartered Accountant Services, Management Consultant Services, services are not used for providing the Customer Care Services which was exported. in the appellant's own case CST v. Convergys India (P.) Ltd. (2009 (5) TMI 50 - CESTAT, NEW DELHI), rebate was allowed. Issues Involved:1. Eligibility of rebate claims under Rule 5 of the Export of Services Rules, 2005.2. Compliance with the conditions and procedures prescribed in Notification No. 12/2005-ST.3. Proof of export and correlation of remittances with export invoices.4. Eligibility of specific input services (advertisement, Chartered Accountant, and Management Consultancy) for rebate.5. Application of the principle of unjust enrichment.6. Imposition of penalty under Section 78 of the Finance Act, 1994.Issue-wise Detailed Analysis:1. Eligibility of Rebate Claims:The appellant, engaged in providing call center services categorized under 'business auxiliary services', filed rebate claims for service tax paid on input services used in providing their output service, treating these as export under the Export of Services Rules, 2005. The jurisdictional Assistant Commissioner sanctioned part of the rebate claims but rejected a portion due to non-eligibility of certain services and lack of original invoices. The Commissioner, upon review, disallowed the entire sanctioned rebate, citing non-compliance with procedural requirements and unjust enrichment.2. Compliance with Notification No. 12/2005-ST:The Commissioner disallowed the rebate claims on the grounds that certain input services were not specifically mentioned in the declarations filed under para 3.1 of Notification No. 12/2005-ST. The Tribunal found that the appellant had substantially complied with the notification's requirements, as the declarations included a general mention of 'Other Services,' and the Assistant Commissioner had verified and accepted the declarations. The Tribunal held that the failure to specifically mention certain services was a technical lapse and not a valid reason to deny the rebate.3. Proof of Export and Correlation of Remittances:The Commissioner argued that the Foreign Inward Remittance Certificates (FIRCs) submitted by the appellant did not contain export invoice numbers, making it difficult to establish a direct correlation. The Tribunal noted that the Assistant Commissioner had verified the co-relation between export invoices and FIRCs and found them satisfactory. The Tribunal held that the absence of invoice numbers on FIRCs alone was not sufficient to deny the rebate claim, as the appellant had provided adequate evidence of export.4. Eligibility of Specific Input Services:The Commissioner disallowed the rebate for services like advertisement, Chartered Accountant, and Management Consultancy, arguing they were not used for providing the exported output service. The Tribunal referenced its previous decision in the appellant's case, which held that input services eligible for Cenvat credit should also be eligible for rebate. The Tribunal found the Commissioner's order unsustainable, as these services were indeed input services used in providing the exported service.5. Application of Unjust Enrichment:The Commissioner ordered the rebate amount to be credited to the Consumer Welfare Fund, citing unjust enrichment. The Tribunal found this order contradictory, as the Commissioner had simultaneously disallowed the rebate claim. The Tribunal clarified that the principle of unjust enrichment does not apply to export rebates under Section 11B of the Central Excise Act, 1944, as applicable to service tax matters. Therefore, the order to credit the rebate amount to the Consumer Welfare Fund was not sustainable.6. Imposition of Penalty:The Commissioner imposed a penalty under Section 78 of the Finance Act, 1994, alleging willful misstatement and suppression of facts by the appellant. The Tribunal criticized the casual manner in which the penalty was imposed, noting the lack of evidence for such allegations. The Tribunal emphasized that the appellant had submitted all relevant documents to the Assistant Commissioner, who sanctioned the rebate after due verification. The Tribunal found no basis for the penalty, as there was no evidence of fraud or collusion.Conclusion:The Tribunal set aside the Commissioner's order, allowing the appellant's appeal and dismissing the revenue's appeal. The Tribunal found the grounds for denying the rebate claim flimsy and unsupported by evidence. The Tribunal also highlighted the improper application of unjust enrichment and the unwarranted imposition of penalties, reflecting a lack of adherence to legal standards and principles.