Rebate on exported output services cannot be denied on an input-service nexus objection where notification conditions are otherwise met.

Rebate of Service Tax paid on exported output services was held to depend on whether tax had been paid on the exported service and whether the conditions of Notification No. 11/2005-S.T. were satisfied. A nexus-based objection relating to input services was treated as inapplicable to a rebate claim for output service, especially where the show-cause notice did not clearly propose that ground for denial. Non-submission of the rebate claim copy was held irrelevant to substantive entitlement. The rejection of rebate was therefore unsustainable, and consequential relief followed.

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Issues: Whether rebate of Service Tax paid on exported output services could be rejected on the ground of lack of nexus between input services and the exported service, and whether non-submission of the rebate claim copy justified rejection.

Analysis: The rebate claimed related to tax paid on the output service exported under Notification No. 11/2005-S.T. The decisive consideration was whether tax had been paid on the exported service and whether the conditions of the notification were satisfied. A nexus-based objection concerned eligibility of input credit and could not be imported into a rebate claim for output service when the show-cause notice did not clearly propose such a basis for denial. The objection regarding non-filing of the rebate claim copy was held to be irrelevant to the substantive entitlement to rebate.

Conclusion: Rejection of the rebate claim on the ground of nexus was unsustainable, and the assessee was entitled to rebate with consequential relief.

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