2023 (2) TMI 1043 - AT - Service Tax

Tax Department's Appeal Dismissed in Refund Dispute Over Iron Ore Export

The Department appealed the Commissioner (Appeals) order upholding a refund of Rs.53,73,949 to the respondent, based on a 2009 Notification on service tax ... Refund of service tax paid on services relating to export of iron ore fines - allegation was that the condition set out in the Notification dated 07.07.2009 that requires, in a case where refund sought is more than 0.25% of the declared Free on Board value of export, a certificate of the Chartered Accountant who audits the annual accounts of the exporter for the purposes of the Companies Act, to be furnished had not been satisfied - non-submission of relevant invoices / bills raised by the various service providers in respect of services utilized for export of iron ore fines pertaining to the refund claim. HELD THAT:- The show cause notice does not allege that the respondent had actually exported lesser quantity of iron ore fines than shown in the shipping bills. Though it was not a charge in the show cause notice, but a finding has still been recorded by the Commissioner (Appeals) that the respondent had filed the refund claim on the basis of quantity of iron ore fines which were actually loaded / exported. The show cause notice is the foundation on the basis of which any order can be passed and in the absence of any allegation in the show cause notice, it is not permissible for the department to raise this ground in the appeal that has been filed. Appeal dismissed. Issues:Appeal against refund order, Compliance with notification for refund claim, Allegations in show cause notice, Refund claim rejection, Appeal against rejection, Basis of refund claim, Grounds for appeal, Examination of invoices, Allegations in show cause notice vs. findings in order.Comprehensive Analysis:The Department filed an appeal challenging the order passed by the Commissioner (Appeals) upholding the refund of Rs.53,73,949/- to the respondent and dismissing the appeal. The respondent had claimed a refund of Rs.93,17,618/- based on a 2009 Notification related to service tax paid on iron ore fines export. A show cause notice was issued for not submitting required documents. The Deputy Commissioner sanctioned a partial refund of Rs.53,73,949/- but rejected the rest. The Commissioner (Appeals) later approved the full refund, which was not appealed by the Department.The Department appealed against the sanction of Rs.53,73,949/- refund, which was also dismissed. The Commissioner noted the refund claim was based on iron ore fines quantity in Bills of Lading actually exported. The appeal contended the Commissioner's findings were incorrect. The Department argued the claim was not based on actual export quantity, while the respondent disagreed. The show cause notice required a Chartered Accountant's certificate for refunds exceeding 0.25% of export value, which was not fully met. However, the invoices were thoroughly examined, leading to the refund approval.The appeal was dismissed as the show cause notice did not accuse the respondent of exporting less iron ore fines than declared, making it impermissible for the Department to raise new grounds. The order emphasized the importance of allegations in the show cause notice as the basis for decisions. The appeal lacked merit due to the absence of such allegations. Therefore, the appeal was dismissed based on the lack of permissible grounds for challenging the refund approval.This detailed analysis covers the issues involved in the legal judgment, including the appeal against the refund order, compliance with notification requirements, allegations in the show cause notice, rejection and approval of the refund claim, examination of relevant documents, and the significance of allegations in the show cause notice for appeal grounds.