2018 (4) TMI 614 - AT - Service Tax

Tribunal affirms duty-free shops' eligibility for service tax refund under Notification No. 41/2012-ST.

Commissioner of Service Tax-V, Mumbai Versus DFS India Pvt. Ltd.

Commissioner of Service Tax-V, Mumbai Versus DFS India Pvt. Ltd. - [2018] 59 G S.T.R. 481 (CESTAT - Mum), 2019 (365) E.L.T. 577 (Tri. - Mumbai) Issues Involved:1. Eligibility for refund under Notification No. 41/2012-ST.2. Unjust enrichment due to input costs included in sale price.3. Validity of refund claims for services at unregistered premises.4. Method of apportionment of service tax on charges.5. Status of duty-free shops as exporters.6. Validity of the Chartered Accountant's certificate.Issue-wise Detailed Analysis:1. Eligibility for Refund under Notification No. 41/2012-ST:The primary issue was whether the respondent, operating duty-free shops, qualifies as an exporter eligible for a service tax refund under Notification No. 41/2012-ST. The Tribunal concluded that the goods sold at duty-free shops are exports since they are cleared for international passengers, and no customs duty is levied. The Tribunal referenced Section 71 of the Customs Act, which allows warehoused goods to be removed only for home consumption, exportation, or other stipulated purposes. Since the goods were sold to international passengers, they were considered exported. The Tribunal also cited previous judgments and public notices that deemed sales vouchers as equivalent to shipping bills, reinforcing that the sales at duty-free shops are exports.2. Unjust Enrichment:The revenue argued that the respondent might have included input costs in the sale price, leading to unjust enrichment. However, the Tribunal found that the adjudicating authority did not base its rejection on this ground. Moreover, in cases of exports, the principle of unjust enrichment does not apply. The Tribunal referred to Section 93A of the Finance Act, 1994, and Notification No. 41/2012-ST, which do not consider unjust enrichment for export refunds.3. Validity of Refund Claims for Services at Unregistered Premises:The revenue contended that the respondent's refund claims included services at the Delhi International Airport, which was not registered. The Tribunal noted that the respondent had separate invoices for shops at the Mumbai International Airport and found them eligible for a full rebate. For the Delhi International Airport, the shop was located at the departure terminal, making the respondent eligible for the full rebate.4. Method of Apportionment of Service Tax on Charges:The revenue challenged the respondent's method of apportioning service tax based on shop size, arguing it was flawed as some charges were based on revenue share. The Tribunal upheld the Commissioner (Appeals)'s decision, which found the respondent's apportionment method correct. The Commissioner (Appeals) reasoned that the charges paid to Mumbai International Airport Ltd were essentially rent for space, and thus, apportionment based on area was appropriate.5. Status of Duty-Free Shops as Exporters:The revenue argued that the duty-free shops are not exporters, as the passengers are the actual exporters. The Tribunal disagreed, stating that the sales at duty-free shops are exports since the goods are taken out of India by international passengers. The Tribunal cited previous judgments and public notices that supported this view.6. Validity of the Chartered Accountant's Certificate:The revenue questioned the validity of the Chartered Accountant's certificate, which included disclaimers about the accuracy of the data. The Tribunal found that the certificate met the requirements of Notification No. 41/2012-ST, which only required certification that the input services were received, service tax paid, and services used for export. The Tribunal noted that the auditors followed professional guidelines and were not required to verify compliance with customs, excise, or service tax laws.Conclusion:The Tribunal dismissed the revenue's appeal, finding no reason to deviate from the Commissioner (Appeals)'s order. The Tribunal upheld that the respondent's sales at duty-free shops are exports, the apportionment method was correct, and the Chartered Accountant's certificate was valid. The refund claims were thus deemed admissible.