2016 (3) TMI 12 - AT - Service Tax

Tribunal remands case for fresh adjudication on service tax liability & exemptions

The Tribunal remanded the case to the Commissioner for fresh adjudication, setting aside the impugned order. The issues addressed included service tax ... Exemption under Notification No.41/2007-ST - reverse charge liability for Goods Transport by Road services - proviso to clause 2(a) - exemption claim by exporter who is liable to pay service tax - exemption under Notification No.18/2009-ST and compliance of Form EXP1/EXP2 - remand for fresh adjudication - avoidance of otiose construction in statutory interpretationExemption under Notification No.41/2007-ST - reverse charge liability for Goods Transport by Road services - proviso to clause 2(a) - exemption claim by exporter who is liable to pay service tax - avoidance of otiose construction in statutory interpretation - Whether the exporter, who as recipient is liable to pay service tax on GTA services on reverse charge basis, can claim exemption under Notification No.41/2007-ST in terms of the proviso to clause 2(a) and whether the adjudicating authority was right in treating refund as the only route. - HELD THAT: - The Tribunal examined clause 2(a) of Notification No.41/2007-ST and the proviso thereto and held that where the person liable to pay service tax under section 68(2) is the same person as the exporter, that person may claim the exemption under the proviso rather than being obliged first to pay service tax and then seek refund. The Tribunal reasoned that construing the main clause to require payment and refund would render the proviso redundant and that such an interpretation should be avoided. The adjudicating authority had applied only the principal limb of clause 2(a) and rejected the proviso; it also did not consider the Departmental Trade Notice referred to by the appellant. In view of these deficiencies the Tribunal did not decide the exemption on merits but set aside the impugned order and remanded the matter to the Commissioner for fresh consideration of the proviso and related aspects. [Paras 2]Impugned findings set aside and matter remanded to the Commissioner for fresh adjudication on the applicability of the proviso to clause 2(a) of Notification No.41/2007-ST.Exemption under Notification No.18/2009-ST and compliance of Form EXP1/EXP2 - remand for fresh adjudication - Whether benefit of Notification No.18/2009-ST was rightly denied for GTA services for the period July 2009 to March 2011 on the basis of entries in Form EXP2 and whether the single instance relied upon defeats the exemption for the whole period. - HELD THAT: - The Tribunal noted that Notification No.18/2009-ST conditions entitlement on filing Form EXP1 and periodic EXP2 returns evidencing actual export. The adjudicating authority relied on an invoice dated 23.10.2009 appearing in the EXP2 for the half year ending 30.9.2009 and inferred afterthought, thereby denying the exemption. The appellant explained that EXP2 was filed for the relevant half year before raising that bill and that the invoice was introduced subsequently at the instance of Range authorities; shipping bills and BRCs were accepted by the authority, which establishes export. The Tribunal held that denial of the Notification's benefit for the entire period based on that single instance was impermissible and that the adjudicating authority had not examined other documentary evidence. Accordingly the matter was remanded to the Commissioner for fresh decision on entitlement under Notification No.18/2009-ST after examining all records. [Paras 2]Findings set aside and matter remanded to the Commissioner for fresh adjudication on entitlement to Notification No.18/2009-ST with consideration of EXP1/EXP2 compliance and supporting export documents.Remand for fresh adjudication - Whether confirmations relating to transportation charges for services to other exporters and inter-carting charges in mines (amounts already partly deposited) should be reconsidered in view of remand. - HELD THAT: - The appellant had deposited specified amounts and challenged confirmations relating to transportation to other exporters and inter-carting charges. The Tribunal, having remanded related issues, directed that these contested confirmations be kept open for fresh consideration by the adjudicating authority in the remand proceedings so that the appellant's challenges can be decided on merits. [Paras 2]Issues regarding the transportation and inter-carting charge confirmations kept open and remitted to the adjudicating authority for fresh consideration.Classification as Mining of Mineral Oil and Gas service - remand for fresh adjudication - Whether services described as crushing of mine ore and loading fall within 'Mining of Mineral Oil and Gas service' and whether demand can be confirmed where consideration has not been received from service recipients for the period April 2010 to March 2011. - HELD THAT: - The Tribunal observed that earlier decisions of the Tribunal indicate crushing and loading would not ordinarily fall within mining services and that the appellant also contends that consideration for the services has not been received, which would affect the liability. The Tribunal did not decide these contentions on merits but remanded the matter so that the appellant may raise these submissions before the adjudicating authority for fresh consideration of classification and receipt of consideration. [Paras 2]Matter remanded to the Commissioner for fresh adjudication on classification as mining service and on whether demand can be confirmed where consideration for services has not been received.Final Conclusion: The Tribunal set aside the impugned order in part and remanded multiple facets of the service tax demand - viz., applicability of the proviso to clause 2(a) of Notification No.41/2007-ST (April 2009 to June 2009), entitlement under Notification No.18/2009-ST and EXP1/EXP2 compliance (July 2009 to March 2011), issues relating to transportation and inter-carting charges, and classification/receipt aspects of alleged mining services (April 2010 to March 2011) - directing fresh adjudication by the Commissioner; stay and appeal disposed accordingly. Issues:1. Service tax liability on reverse charge basis for recipient of GTA services.2. Exemption from payment of service tax under Notification No.41/2007-ST.3. Benefit of exemption Notification No.18/2009-ST for GTA services received.4. Challenge of confirmations relating to transportation charges.5. Demand confirmed under 'Mining of Mineral Oil and Gas service.'Analysis:1. Service tax liability on reverse charge basis for recipient of GTA services:The Tribunal noted the appellant's status as an exporter of iron ore availing various services, including Goods Transport by Road services. A demand of around Rs. 7.21 crores was confirmed against the appellant for service tax liability, interest, and penalties. The Tribunal decided to remand the matter to the Commissioner for fresh adjudication.2. Exemption from payment of service tax under Notification No.41/2007-ST:A demand of Rs. 5,46,543/- was confirmed against the appellant for the period April 2009 to June 2009, rejecting the appellant's plea for exemption under Notification No.41/2007-ST. The Tribunal analyzed the Notification's provisions and the issue of claiming exemption by the exporter who is also liable to pay service tax. It was concluded that the matter needed further consideration by the Commissioner, considering the proviso to the Notification.3. Benefit of exemption Notification No.18/2009-ST for GTA services received:An amount of Rs. 6.18 crores approximately was confirmed for GTA services received from July 2009 to March 2011 by rejecting the benefit of exemption under Notification No.18/2009-ST. The Tribunal found discrepancies in the adjudicating authority's observations regarding the exporter's compliance with the conditions of the Notification. It was decided to remand the issue for fresh decision by the Commissioner.4. Challenge of confirmations relating to transportation charges:The appellant had deposited amounts related to transportation charges but challenged the confirmations. As the matter was being remanded, the Tribunal kept these issues open for fresh consideration by the adjudicating authority.5. Demand confirmed under 'Mining of Mineral Oil and Gas service':A part of the demand amounting to Rs. 28,97,304/- was confirmed for the period April 2010 to March 2011 under the category of 'Mining of Mineral Oil and Gas service.' The appellant raised objections based on the nature of services provided and non-receipt of consideration. The Tribunal allowed the appellant to present these submissions before the adjudicating authority during the fresh consideration.In conclusion, the Tribunal set aside the impugned order and remanded the matter for detailed reconsideration by the Commissioner, addressing various issues related to service tax liability, exemptions, compliance with Notification conditions, transportation charges, and nature of services provided.