Refund of service tax for export services cannot be denied when substantive conditions under the export notification are satisfied.

Notification No. 41/2012-ST allows refund of service tax on specified services used for export of goods. For excisable goods, the relevant services are those used beyond the place of removal; for other goods, the services must be used for export of the goods. A merchant exporter who purchased goods domestically and exported the entire quantity, with the exports reflected in the accounts, satisfied the substantive conditions. Refund could not be denied merely for alleged procedural non-compliance where export and use of services for export were not disputed.

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Issues: Whether a merchant exporter who exported goods procured from domestic sources was entitled to refund of service tax under Notification No. 41/2012-ST dated 29.06.2012, and whether the refund could be denied on the ground that the services were used beyond the place of removal or for alleged non-compliance with procedural conditions.

Analysis: The Notification grants rebate by way of refund of service tax on specified services used for export of goods. In the case of excisable goods, the relevant services are those used beyond the place of removal, while for other goods the services must be used for export of the goods. The respondent was found to be a merchant exporter who purchased goods domestically and exported the entire quantity, with the transactions reflected in the accounting records. The disputed services were used in relation to exportation of goods, and there was no specific allegation that the goods were not exported. The refund could not be denied merely on procedural grounds when the substantive entitlement under the Notification stood satisfied.

Conclusion: The respondent was entitled to refund under Notification No. 41/2012-ST dated 29.06.2012, and the Revenue's challenge failed.

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