2023 (10) TMI 1175 - AT - Service Tax

CESTAT allows service tax refund for export-related services, rejects restrictive interpretation of beneficial notifications

CESTAT Allahabad allowed the appeal regarding refund of service tax paid on Clearing Forwarding Agent Service, Banking Other Financial Service, Courier ... Refund of service tax paid - Clearing & Forwarding Agent Service - Banking & Other Financial Service - Courier Service - Customs House Agent Service - refund claim was rejected by the Original Authority by observing that port of export was the place of removal and Clearing & Forwarding Agent Service, Courier service and Customs House Agent Service, were not used beyond the port of export i.e. place of removal - HELD THAT:- From the N/N. 41/2012 itself it is evident that the notification has been issued to grant the rebate/ refund of service tax paid in respect of export of goods. Such a beneficial notification which provide for refund/ rebate of taxes to the exporters are in line with the most talked philosophy in this regards “that export the goods and not the taxes”. If the taxes paid on the goods either at the stage of input of finished product as exported, are exported than that will render the exports of the country un-competitive with the goods being exported from elsewhere. Hence all such notifications which provide for disburdening the exports from the domestic taxes need to be interpreted with the above objective in mind. There are no merits in the impugned order by holding that this calculation has to be done shipping bill wise and rebate claim rejected where the difference arrived at in respect of those shipping bills where the papers arrived at is less than twenty percent when such a condition is not prescribed by the notification. The grounds for denial had been stated in the show cause notice but the same were never taken up by the original authority for denying/ modifying the rebate/ refund claim made by the appellant. The grounds on which the rebate/ refund claim made by the appellant was rejected by the original authority has not been agreed to by the Commissioner (Appeals). He has to that extent of merits of the order set aside the order of original authority but goes on to uphold the denial of the refund claims made in respect of the shipping bills mentioned in para 2 & 3 of the Show Cause Notice. Such an approach were by Commissioner (Appeal) decides the appeal beyond the scope of impugned order cannot be appreciated, because it is also settled principle in law that no person can be made worse off in his own appeal. The impugned order is set aside and appeal is allowed. Issues Involved:1. Eligibility for refund of Service Tax based on original invoices.2. Calculation of rebate difference less than twenty percent shipping bill wise.3. Rejection of refund claims where rebate is less than Rs. 500.4. Rejection of refund claims where percentage of refund claim exceeds 0.50% of FOB value without Chartered Accountant certificate.Summary:1. Eligibility for Refund of Service Tax Based on Original Invoices:The Commissioner (Appeals) held that the appellant is not eligible for the refund of Service Tax wherever they have not provided the original invoices of the service providers. It was emphasized that 'when a particular thing is directed to be performed in a manner prescribed by Rules, it should be performed in that manner itself and not otherwise.' The appellant failed to enclose the original invoices in respect of the service providers mentioned in Para 1 of the Show Cause Notice dated 28.11.2014.2. Calculation of Rebate Difference Less Than Twenty Percent Shipping Bill Wise:The Commissioner (Appeals) observed that the appellant filed the rebate under Para 3 of the notification. The Adjudicating Authority noted that the difference between the rebate amounts under procedures specified in paragraph 2 and paragraph 3 was less than twenty percent for each shipping bill. The Commissioner (Appeals) found no merit in the appellant's submission that the notification did not require the difference to be computed shipping bill wise. However, the Tribunal disagreed, stating that 'there is no condition prescribed in the Notification as per which the rebate claims as admissible under (2) and (3) are to be calculated for the difference shipping bill wise.' The Tribunal emphasized that a notification should be interpreted strictly based on the words used without any addition or subtraction.3. Rejection of Refund Claims Where Rebate is Less Than Rs. 500:The Commissioner (Appeals) upheld the rejection of refund claims where the rebate involved in a claim is less than Rs. 500, as specified in Para 3(j) of the notification. The Tribunal noted that the eligibility of the refund claim under the notification is to be examined in respect of each shipping bill, and thus, the appellant is not eligible for refund in respect of shipping bills mentioned in Para 3 of the Show Cause Notice.4. Rejection of Refund Claims Where Percentage of Refund Claim Exceeds 0.50% of FOB Value Without Chartered Accountant Certificate:The Commissioner (Appeals) noted that in some shipping bills, the percentage of refund claim was more than 0.50% of the FOB value, and the appellant had not submitted the requisite certificate of the Chartered Accountant as required by Para 3(i) of the notification. The Tribunal found that the appellant had complied with the requirement of certification by the Chartered Accountant and should not be denied the refund in respect of such shipping bills.Conclusion:The Tribunal set aside the impugned order, allowing the appeal. It was highlighted that the Commissioner (Appeals) had decided on issues not considered by the Original Authority, which is beyond the scope of the impugned order. The Tribunal emphasized that 'no person can be made worse off in his own appeal.'