2016 (11) TMI 870 - AT - Service Tax

Tribunal affirms denial of Revenue's appeal on service tax exemption eligibility under Notification

The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal against the eligibility of the respondent for exemption/refund ... Eligibility for exemption/refund in terms of N/N. 41/2007-S.T., dated 6-10-2007 - export of excisable goods Soyabean Meal - Technical and Testing Services - Custom House Agent Services - Technical Inspection and Certification Services - Held that: - The services now under dispute were provided by registered service providers under the category of “Technical Testing and Analysis Services”. The tax has been collected under the said heading and no objection has been raised on that account. As such, the Commissioner (Appeals) found that the denial of refund of service tax paid by the respondent for the services for which they have paid service tax under the category of ‘Technical Testing and Analysis’ is not justified. He also observed that it is possible that a service may appear to be classifiable under more than one heading. Proper classification will be guided by the essential character in case of composite services. After due examination, the learned Commissioner (Appeals) held that the respondents are correctly eligible for refund. After careful consideration of the grounds of appeal and the impugned order, we find no merit in the present appeal and accordingly dismiss the same. Issues:Eligibility of respondent for exemption/refund under Notification No. 41/2007-S.T. for services availed while exporting finished goods.Analysis:The case involved an appeal by the Revenue against an order of the Commissioner (Appeals-I), Indore, regarding the eligibility of the respondent for exemption/refund under Notification No. 41/2007-S.T. The respondents, engaged in exporting excisable goods, claimed a refund of service tax paid for services like Technical and Testing Services, Custom House Agent Services, and Technical Inspection and Certification Services. The Department contended that the services availed were not specified under the notification, challenging the sanction of refund. The Commissioner (Appeals) rejected the Department's appeal, upholding the refund with minor modifications. The Revenue then appealed this decision.The grounds of appeal by the Revenue argued that the Commissioner (Appeals) erred in allowing the refund for services not specified under the Notification No. 41/2007-S.T. Specifically, they claimed that services like Supervision of weighment, Sampling Container, Stuffing Analysis, and Additional Testing Charges were not covered for refund under the relevant section of the Finance Act, 1994.Upon hearing both sides and examining the records, the Tribunal found that the Commissioner (Appeals) had thoroughly analyzed the issue. The disputed services were provided by registered service providers under the category of Technical Testing and Analysis Services, with tax collected under this heading without objection. The Commissioner (Appeals) concluded that denying the refund for services the respondent had paid tax for under Technical Testing and Analysis category was unjustified. It was noted that a service might fall under multiple headings, and proper classification should consider the essential character, especially in the case of composite services. After careful consideration, the Tribunal found no merit in the Revenue's appeal and dismissed it accordingly.