2018 (4) TMI 25 - AT - Service Tax

Export Refund Claim Filing Date Based on Foreign Exchange Receipt

The Tribunal determined that the period for filing a refund claim in export transactions should be based on the date of receipt of convertible foreign ... Relevant date for refund claim in export of services - export of service qualifies only upon receipt of convertible foreign exchange - date of FIRC as proof of receipt of convertible foreign exchange - Indian rupees received through a foreign bank treated as convertible foreign exchangeRelevant date for refund claim in export of services - date of FIRC as proof of receipt of convertible foreign exchange - Period of one year for filing refund must be computed from the date of receipt of convertible foreign exchange (date of FIRC) and not from the date of invoice. - HELD THAT: - The Tribunal held that supply of service qualifies as export only when convertible foreign exchange is received by the service provider. Consequently, the statutory one year period for filing the refund claim runs from the date on which convertible foreign exchange is received and evidenced (date of FIRC) rather than from the invoice date or date of service. The respondent filed the refund claim within one year from the dates of FIRC; therefore the claim was held to be timely. [Paras 4]Refund limitation period to be reckoned from date of receipt of convertible foreign exchange (date of FIRC); claim held timely.Indian rupees received through a foreign bank treated as convertible foreign exchange - treatment of remittance through foreign bank - Remittance received in Indian rupees through a foreign bank is to be treated as receipt of convertible foreign exchange for purposes of qualifying a supply of service as export. - HELD THAT: - Relying on and applying the reasoning in Sun Area Real Estate Pvt. Ltd. (Tri.-Mumbai), the Tribunal observed that Indian rupees received through a foreign bank qualify as payment in convertible foreign exchange after considering the relevant RBI and FEMA provisions addressed in that precedent. On identical facts, the Tribunal held that such receipt satisfies the requirement of receipt in convertible foreign exchange and therefore the supply qualifies as export of service. [Paras 4]Receipt of payment in Indian rupees routed through a foreign bank is to be treated as receipt of convertible foreign exchange; supply qualifies as export.Final Conclusion: The impugned order of the Commissioner (Appeals) is upheld; the Revenue's appeal is dismissed and the stay application disposed of. Issues:1. Determination of the period for filing a refund claim based on the date of receipt of foreign exchange or the date of invoice.2. Consideration of remittance received in Indian rupees against export as convertible foreign exchange for qualifying the supply of service as export.Analysis:Issue 1:The primary issue in this case revolves around the period for filing a refund claim concerning export transactions. The appellant argued that the date of export should be determined based on the invoice date rather than the date of Foreign Inward Remittance Certificate (FIRC). On the other hand, the respondent contended that the relevant date for filing the appeal under service tax provisions is when the provider of service receives remittance in convertible foreign exchange. The Tribunal analyzed the submissions and referred to the requirement that export of service qualifies only when convertible foreign exchange is received. The Tribunal concluded that the appellant filed the refund claim within one year from the receipt of convertible foreign exchange, making the date of FIRC the relevant date for determining the period for filing the refund claim.Issue 2:The second issue pertains to whether remittance received in Indian rupees against export transactions should be considered as convertible foreign exchange for the purpose of qualifying the supply of service as export. The Revenue argued that remittance received in Indian rupees does not meet the criteria of convertible foreign exchange, thus disqualifying the supply of service as an export transaction. However, the respondent contended that even if the remittance was received in Indian rupees, if it was through a foreign bank, it should be considered as payment in convertible foreign exchange. The Tribunal referenced a previous judgment in a similar case and held that Indian rupees received through a foreign bank are considered as payment in convertible foreign exchange, aligning with provisions of the Reserve Bank of India and Foreign Exchange Management Act. Consequently, the Tribunal dismissed the Revenue's appeal and upheld the impugned order, emphasizing that the issue regarding remittance in Indian rupees through a foreign bank as convertible foreign exchange had been conclusively settled in previous jurisprudence.In conclusion, the Tribunal's decision reaffirms the importance of receiving convertible foreign exchange for qualifying export transactions and clarifies the treatment of remittance in Indian rupees through a foreign bank as meeting the criteria of convertible foreign exchange.