2023 (6) TMI 369 - AT - Service Tax

Tribunal upholds appellant's refund claims under Notification No 41/2012-ST despite GST introduction. Accrued rights protected.

M/s. Karp Impex Ltd. Versus Commissioner of CGST & CE, Mumbai East

M/s. Karp Impex Ltd. Versus Commissioner of CGST & CE, Mumbai East - TMI Issues Involved:1. Applicability of Notification No 41/2012-ST dated 29.06.2012 post-GST regime.2. Admissibility of refund claims under the repealed notification.3. Impact of transitional provisions under the CGST Act, 2017 on accrued rights.4. Compliance with procedural and substantive requirements for refund claims.Issue-wise Detailed Analysis:1. Applicability of Notification No 41/2012-ST dated 29.06.2012 post-GST regime:The appellant filed refund claims based on Notification No 41/2012-ST, which provided a rebate of service tax paid on specified services used for the export of goods. The Assistant Commissioner sanctioned the refund, but the Revenue challenged it, arguing that the notification ceased to be applicable from 01.07.2017, with the introduction of the GST regime. The Commissioner (Appeals) set aside the Assistant Commissioner's order, stating that the refund claims were not maintainable under the repealed notification.2. Admissibility of refund claims under the repealed notification:The appellant contended that the right to rebate/refund accrued under the existing law (Chapter V of the Finance Act, 1994) and should not be affected by the introduction of the GST regime. The Assistant Commissioner found that the refund claims were filed within the stipulated time and that the services in question were used for the export of goods, thus satisfying the conditions of the notification. The Tribunal noted that the notification created a complete code for rebate claims, including the manner of claiming and processing the refund, without any limitation on the period between the receipt of input services and the export of goods.3. Impact of transitional provisions under the CGST Act, 2017 on accrued rights:The Commissioner (Appeals) misdirected by focusing on the transitional provisions of the CGST Act, 2017, rather than the notification in dispute. The Tribunal emphasized that the right to claim a rebate accrued when the service tax was paid on input services, as supported by the Supreme Court's decisions in Eicher Motors Ltd. and Dai Ichi Karkaria. Section 174 of the CGST Act, 2017, ensures that the repeal of the Finance Act, 1994, does not affect rights, privileges, obligations, or liabilities acquired or accrued under the repealed Act.4. Compliance with procedural and substantive requirements for refund claims:The Assistant Commissioner confirmed that the refund claims were complete, certified, and arithmetically accurate. The appellant had not taken CENVAT credit of the service tax paid and had complied with all conditions of the notification. The Tribunal found that the Commissioner (Appeals) did not dispute these findings and failed to consider the notification's provisions adequately.Conclusion:The Tribunal allowed the appeal, setting aside the impugned order and upholding the appellant's right to the refund claims under Notification No 41/2012-ST. The Tribunal emphasized that the accrued right to rebate could not be extinguished by the subsequent repeal of the Finance Act, 1994, and the introduction of the GST regime. The appeal was pronounced in the open court.