2013 (2) TMI 385 - HC - Service Tax

High Court allows appeal for rebate claims due to practical difficulties in complying with procedural requirement.

WIPRO LIMITED Versus UNION OF INDIA

WIPRO LIMITED Versus UNION OF INDIA - 2013 (29) S.T.R. 545 (Del.) , [2013] 61 VST 194 (Del) Issues Involved:1. Compliance with Notification No.12/2005-ST dated 19.04.20052. Filing of declaration prior to export of taxable services3. Procedural vs. substantive requirements for rebate claims4. Practical difficulties in compliance due to nature of businessDetailed Analysis:1. Compliance with Notification No.12/2005-ST dated 19.04.2005:The appellant, engaged in IT-enabled services, filed rebate claims for service tax paid on input services. The claims were rejected by the Deputy Commissioner, Service Tax, and upheld by the Commissioner of Central Excise (Appeals) on the grounds of non-compliance with the procedural requirements of Notification No.12/2005-ST. Specifically, the appellant had not filed the required declaration prior to the date of export of taxable services.2. Filing of Declaration Prior to Export of Taxable Services:The appellant argued that due to the continuous nature of their services, it was practically impossible to file the declaration prior to the export. They contended that the details required in the declaration could only be accurately provided in the rebate claim forms filed post-export. The lower authorities, including the CESTAT, maintained that the procedural requirement was essential to prevent tax evasion and ensure proper audit checks.3. Procedural vs. Substantive Requirements for Rebate Claims:The core issue was whether the procedural requirement of filing the declaration prior to export was mandatory or could be considered directory given the practical difficulties. The Tribunal remanded the matter back to the original adjudicating authority to verify if the appellant had filed the required declarations, albeit with delays, and whether such delays could be condoned based on the precedent set in the Convergys India Pvt. Ltd. case.4. Practical Difficulties in Compliance Due to Nature of Business:The High Court acknowledged the unique nature of the appellant's business, which involved continuous and seamless export of services. It noted the practical impossibility of determining the exact date of export and the specifics of input services used before actual export. The Court emphasized that any condition must be capable of compliance and, in this case, the requirement of filing a declaration prior to export was not feasible. The Court found merit in the appellant's argument that the details provided post-export in the rebate claims were more accurate and verifiable.Judgment:The High Court allowed the appeal, directing the respondents to allow the rebate claims. The Court clarified that its decision was based on the specific facts and nature of the appellant's business, without addressing the broader question of whether the procedural requirement was mandatory or directory. The Court emphasized that no irregularity or inaccuracy was found in the appellant's rebate claims and that the procedural requirement, in this case, was practically impossible to comply with.Conclusion:The High Court's judgment underscores the importance of considering practical difficulties in compliance with procedural requirements, especially in cases involving continuous services. It highlights the need for flexibility in interpreting procedural conditions to ensure they do not become impossible to comply with, thereby frustrating the purpose of the law.