Appellant granted refund as service tax not liable for services outside India. Appeal allowed, refund confirmed.

The Tribunal held that the appellant was not liable to pay service tax for services received and consumed outside India. The refund claim was granted as the services were not consumed in India, and the appellant had not passed on the tax burden to others. The appeal was allowed, setting aside the previous decision, confirming the refund order, and halting recovery proceedings.

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Issues Involved:
1. Taxability of services received outside India.
2. Applicability of Section 66A of the Finance Act, 1994.
3. Eligibility for refund of service tax paid under reverse charge mechanism.
4. Examination of unjust enrichment.

Summary:

Issue 1: Taxability of Services Received Outside India
The appellant was engaged in the marketing and sale of agrochemicals overseas as a merchant trader, purchasing goods from one country and selling them to another without bringing them to India. The appellant paid various charges in foreign countries and subsequently paid service tax along with interest for the period from 01.10.2007 to 31.12.2012. The appellant filed a refund claim on the ground that the services were rendered and received outside India, thus not liable for service tax under Section 64 of the Finance Act, 1994. The Assistant Commissioner initially sanctioned the refund, but the Commissioner (Appeals) later reversed this decision, leading to the present appeal.

Issue 2: Applicability of Section 66A of the Finance Act, 1994
The Commissioner (Appeals) contended that the services received by the appellant fell under Clause 3(iii) of Notification No. 11/2006-ST dated 19.04.2006, which prescribes the criteria of the location of the recipient of service in India, thus making the services taxable. However, the Tribunal observed that the services were neither imported into India nor exported out of India, and were consumed outside India by service providers situated outside India. The Tribunal held that Section 66A of the Finance Act, 1994, applies only when services are received and consumed in India, which was not the case here.

Issue 3: Eligibility for Refund of Service Tax Paid Under Reverse Charge Mechanism
The Tribunal noted that the appellant paid service tax on their own without any notice or enquiry from Revenue and later sought a refund. The Tribunal held that the services were not consumed in India and thus were not liable for service tax. The refund granted through the order dated 28.05.2013 was in accordance with the law. The Tribunal upheld the order-in-original dated 28.05.2013 and set aside the impugned order, allowing the appeal.

Issue 4: Examination of Unjust Enrichment
The Tribunal also examined whether there was any unjust enrichment. It was observed that the appellant had not passed on the incidence of service tax to any other person, as verified from the books of accounts and invoices. Therefore, the Tribunal concluded that the appellant was eligible for the refund.

Conclusion:
The Tribunal concluded that the appellant was not liable to pay service tax for services received and consumed outside India. The refund of service tax paid by the appellant was in accordance with the law, and the appeal was allowed, setting aside the impugned order. The order of the refund sanctioning authority dated 28.05.2013 was confirmed, and ongoing recovery proceedings were quashed.

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