2013 (9) TMI 741 - HC - Service Tax

Exporter entitled to tax refund despite non-declaration error in shipping bills under amended notification

The High Court of Gujarat held that the exporter, despite not declaring commission paid to commission agents in shipping bills as required by Notification ... Refund of tax - Benefit of notification - Non fulfillment of conditions - Section 65(105)(zzb) - Held that:- Section 65(105)(zzb) of the Notification No. 17/2008-S.T., dated 1-4-2008 provides that exporters was declaring the amount of commission paid or payable to the commission agent in the shipping bill and admittedly, there was no such declaration made by the exporter in the shipping bill. But the amount of commission paid to the commission agent has already been deposited within time by the exporter and he has prayed that this technical error may be condoned. Since there was no effort to defraud the respondent and the amount of commission was already deposited, therefore, the assessee will be entitled for refund in terms of amended Notification No. 17 of 2008-S.T., dated 1-4-2008 and mere mentioning in the shipping bill by the exporter would not disentitle him to claim refund - Decided against Revenue. Issues:Interpretation of conditions under Notification No. 41/2007-S.T. and Notification No. 17/2008-S.T. for claiming tax refund.Analysis:The High Court of Gujarat, comprising V.M. Sahai and N.V. Anjaria, JJ., heard a Tax Appeal regarding the justification of the Tribunal's decision on the fulfillment of conditions under Notification No. 41/2007-S.T. and its amendment by Notification No. 17/2008-S.T. The main question was whether non-fulfillment of these conditions would bar the claim of tax refund for services rendered before the amendment of the notification on 1-4-2008. The Court considered Section 65(105)(zzb) of Notification No. 17/2008-S.T., which required exporters to declare commission paid to commission agents in shipping bills. It was noted that the exporter had not made such a declaration but had deposited the commission amount on time. The Court opined that since there was no fraudulent intent and the commission was paid, the technical error of non-declaration could be condoned. Consequently, the Court held that the assessee was entitled to a refund under the amended Notification No. 17/2008-S.T., despite the lack of declaration in the shipping bill not disentitling the claim for refund.In the detailed analysis, the Court emphasized that the timely payment of the commission by the exporter, even without the required declaration in the shipping bill, was a crucial factor in determining the entitlement to a refund. The Court highlighted that the absence of fraudulent intent and the fulfillment of the financial obligation were significant in this context. The Court's decision was based on the interpretation of the legal provisions under the notifications and the specific circumstances of the case, focusing on the essence of the law and the equitable considerations involved. The Court's reasoning underscored the importance of substantive compliance with the legal requirements and the distinction between technical errors and deliberate attempts to evade tax obligations. Ultimately, the Court dismissed the Tax Appeal, stating that there was no substantial question of law in the matter, and consequently, the Civil Application was also dismissed.