2019 (7) TMI 773 - AT - Service Tax

Tribunal overturns denial of tax exemption due to appellant's uncontrollable delay

M/s HEG Limited Versus Commissioner of Customs, Central Excise And Service Tax, Bhopal

The Tribunal found that the appellant's delay in filing the required returns was immaterial in denying the benefit of the service tax exemption ... Exemption from service tax - various services provided - benefit of N/N. 18/2009-ST dated 07/07/2009 which was superseded by Notification No. 42/2012-ST dated 29/06/2012 - benefit of Notification has been denied to the appellant on the ground that the appellant has not filed the return in form EXP-4 in due time - HELD THAT:- Mere procedure lapse which admittedly is on account of non-availability of shipping bills that too due to delay on the part of customs cannot be the ground to deny the substantial benefit of the Notification. Though one copy of such shipping bill remains with the exporter which could have been annexed with EXP-4 to be filed within time. But delay of 15 days then the prescribed time limit is opined to be insignificant to deny the benefit of the notification especially when all other conditions of the notification are duly complied with by the appellant. The possibility of bonafide belief, that custom copy of shipping bill only has to be annexed, also cannot be ruled out. The delay does not appear to be arising out of malafide intent. Appeal allowed - decided in favor of appellant. Issues: Denial of benefit under service tax exemption Notification due to procedural lapse in filing EXP-2/EXP-4 beyond the prescribed time limit.Analysis:1. The appellant, engaged in exporting goods, sought exemption from service tax under Notification No. 18/2009-ST superseded by Notification No. 42/2012-ST. The benefit was denied due to not filing the return in form EXP-4 within the specified time, leading to the appeal before the Tribunal.2. The appellant argued that all conditions of the Notifications were met except for a 15-day delay in filing the half-yearly return due to backlog at Bombay Customs. The delay was beyond their control, and despite having the shipping bills, the delay in filing EXP-4 should not negate compliance with other conditions for exemption.3. The appellant cited precedents like M/s Metro & Metro and Praj Industries Ltd., where procedural lapses did not warrant denial of exemption benefits, emphasizing that the delay was due to a procedural issue and not intentional non-compliance.4. The Department defended the order, but after hearing both parties, the Tribunal noted that the denial of exemption was solely based on a procedural lapse and not on substantive non-compliance with the Notification requirements.5. The Tribunal referred to previous decisions, highlighting that procedural lapses should not lead to the denial of substantive benefits available under the Notification. The delay in filing EXP-2/EXP-4 was deemed insignificant, especially considering the appellant's compliance with all other conditions.6. Ultimately, the Tribunal found the appellant's delay in filing EXP-2/EXP-4 to be immaterial in denying the benefit of the Notification, especially when all other conditions were met. The delay was attributed to customs issues, and the Tribunal set aside the order, allowing the appeal with any consequential benefits.This detailed analysis of the judgment showcases the procedural nature of the issue and how the Tribunal considered the delay in filing the return in the context of compliance with service tax exemption Notifications.