Export service tax refund on terminal handling charges cannot be denied merely because of service classification.

Refund of input service credit on terminal handling charges was stated to be admissible where the services were used in the course of export business and service tax had been paid on them. The analysis noted that rejection based on the view that the services did not fall within port service was unsustainable, because the applicable circular treated the actual service category as immaterial once export use and tax payment were undisputed. On that basis, refund could not be denied merely due to classification of the service provider's tax discharge, and the claim was held admissible.

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Issues: Whether refund of input service credit on terminal handling charges was admissible when the services were used in the course of export business and service tax had been paid thereon.

Analysis: The refund claim had been rejected on the view that the services did not fall within port service and, therefore, the tax paid thereon could not be refunded. The applicable circular clarified that where the service is used in the course of export business and service tax has been paid, the exact category under which the service provider discharged tax is not material. Since the use of the services for export business and payment of service tax were not in dispute, the refund could not be denied on the basis of service classification.

Conclusion: The refund claim was admissible and the rejection of the claim on terminal handling charges was unsustainable, in favour of the assessee.

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