2024 (9) TMI 772 - AT - Service Tax

Exporters lose service tax refund appeal for medicine exports filed beyond one-year statutory deadline under Section 11B

Rosa Impex Private Limited Versus Commissioner of CGST & Central Excise, Thane Commissionerate, Dadar (West), Mumbai

CESTAT Mumbai dismissed the appeal filed by exporters seeking refund of service tax paid on input services used for export of medicines during April 2013 ... Time limitation for filing refund claim - refund claims have been filed beyond the stipulated time limit of one year - whether service tax paid on input services used for export of medicines for the period April, 2013 to January, 2014, is refundable in terms of N/N. 41/2002-S.T. dated 29.06.2012 or not? - HELD THAT:- The original authority had scrutinized the refund claim filed by the appellants and after recording his findings that the appellants have not filed refund applications within one time had rejected the refunds. It is found that in order to claim the refund of service tax paid on the input services on export of goods as per the N/N.41/2012-S.T. dated 29.06.2012, the requirements are that in respect of various extent/conditions prescribed therein, have to be fulfilled by the claimant/ exporter and the refund shall be granted in the manner specified therein. Further, in terms of Section 11 B of the Central Excise Act, 1944 as made applicable to matters relating to service tax under Section 83 of the Finance Act, 1994, any application for refund of duty/tax shall be filed before the expiry of one year from the relevant date prescribed therein. On the above basis and as per the condition 3(g) of the aforesaid Notification, the refund claim shall be filed within one year from the date of export of the goods for which such input services were used. The case in hand does not relate to the first category of unconstitutional levy or the third category of refund on the basis of the judgement delivered by the Hon’ble Supreme Court. It squarely falls under the second category of duty/tax paid by the claimant which could at the most be treated as illegal levy. However, even in such cases, the legal provisions of Section 11B of the Central Excise Act, 1944 as made applicable to service tax, would apply for refund of service tax. With respect to the time limit for filing of a refund claim in such case, it is mandated under said Section 11B of the Act of 1944 that such refund claim is required to be filed within one year from the relevant date. It is a fact on record that the Notification No.41/2002-S.T. dated 29.06.2012 under which the refund has been filed in this case, had prescribed that the refund claim shall be filed within one year from the date of export. As regards the disputed part of the refund claim relating to Freight, Banking and other Financial services for which the appellants have filed this appeal, it is found that the respective refund claims have been filed beyond the prescribed time limit of one year from the relevant date, and therefore these are clearly barred by limitation of time as mandated under Section 11B of the Central Excise Act, 1944, as made applicable to service tax under Section 83 of the Finance Act, 1994 and as per condition 3(g) of the Notification No. 41/2012-S.T. dated 29.06.2012. There are no grounds for interfering with the impugned order passed by the learned Commissioner (Appeals). Therefore, the appeal preferred by the appellants is liable to be dismissed on the grounds of time bar. The appeal filed by the appellants is dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether service tax paid on specified input services used for export of goods during April 2013-January 2014 is refundable under Notification No. 41/2012-S.T. dated 29.06.2012. 2. Whether refund claims filed on 06.06.2018 for exports made in the quarters April-June 2013; July-September 2013; October-December 2013; and January 2014 are barred by the one-year limitation prescribed by Section 11B of the Central Excise Act, 1944 (as made applicable to service tax) and by condition 3(g) of the Notification. 3. Whether amounts collected as service tax by the Department of Post in respect of Speed Post are to be treated as 'deposit' (not subject to the one-year limitation) or as tax within the ambit of Section 11B such that the time bar applies. ISSUE-WISE DETAILED ANALYSIS - ISSUE 1: Refund entitlement under Notification No. 41/2012 Legal framework: Notification No.41/2012 grants rebate/refund of service tax on specified services used for export of goods subject to conditions (clauses (a)-(h) of paragraph 1 and (a)-(h) of paragraph 2) and permits refund either on specified rates (para 2) or on documents (para 3). Precedent treatment: The Tribunal relies on the statutory scheme; no novel precedent requiring departure is applied at this point. Interpretation and reasoning: The Notification confines rebate to specified services used for export, conditioned inter alia on no CENVAT credit being taken, adherence to procedural formalities, and compliance with the time limit in condition 3(g). The Tribunal examined whether the present claims satisfy these statutory conditions and whether the claims were timely filed. Ratio vs. Obiter: Ratio - refund under Notification No.41/2012 is available only upon compliance with its conditions, including temporal limitation in para 3(g). Obiter - none beyond statutory interpretation. Conclusion: Refund entitlement exists in principle for specified input services used for export, but is conditional on compliance with the Notification's requirements, including the one-year filing period. ISSUE-WISE DETAILED ANALYSIS - ISSUE 2: Applicability of one-year limitation to the present claims Legal framework: Section 11B of the Central Excise Act, 1944 (made applicable to service tax matters by Section 83 of the Finance Act, 1994) prescribes that refund applications shall be filed before expiry of one year from the relevant date; Notification condition 3(g) expressly requires claims to be filed within one year from date of export (relevant date defined as customs clearance permitting export). Precedent treatment: The Tribunal relies on the Supreme Court's classification of refund situations (Mafatlal) to distinguish categories of refunds and to determine the applicable statutory regime for limitation. Interpretation and reasoning: Applying Mafatlal, refunds fall into three categories (unconstitutional levy; illegal levy by misapplication; and finally determined nonsuit cases). The Tribunal found the present case to fall within the second category (illegal levy/incorrect application) where the statutory provisions governing refunds (including Section 11B) apply. The exports occurred in 2013-2014 but claims were filed on 06.06.2018; therefore claims were beyond the one-year period mandated by Section 11B and Notification condition 3(g). Ratio vs. Obiter: Ratio - where refund claims arise from an illegal levy (category two), the specific taxation statute's limitation (Section 11B) governs and a one-year bar applies per the Notification; Obiter - general discussion of Mafatlal categories as background. Conclusion: Refund claims for freight, banking and other financial services were filed after the one-year period and are time-barred under Section 11B and condition 3(g) of the Notification; such claims must be rejected for limitation. ISSUE-WISE DETAILED ANALYSIS - ISSUE 3: Treatment of amounts paid for Speed Post (Department of Post) as deposit vs. tax for limitation purposes Legal framework: Same statutory provisions as above; Commissioner (Appeals) treated the Speed Post component as a 'deposit' (not a tax) and therefore outside Section 11B time restraint. Precedent treatment: Tribunal cites the analytical framework of Mafatlal to decide which statutory limitation applies; no binding precedent was overturned or distinguished that directly establishes postal collections as deposits rather than tax for limitation purposes. Interpretation and reasoning: The Tribunal acknowledged that the Commissioner (Appeals) held Speed Post collections to be 'deposit' not 'tax' and therefore not subject to the one-year bar. The Tribunal observed that that basis is debatable under the statutory regime discussed in paragraph 9.2, but declined to re-open the issue because Revenue did not challenge the Commissioner (Appeals) order and the appellants did not cross-appeal against the allowance; accordingly the Tribunal did not adjudicate the merit of that specific legal characterization. Ratio vs. Obiter: Obiter - the Tribunal signals disagreement with the Commissioner (Appeals)'s categorization as debatable but does not decide the point on merit due to absence of challenge; Ratio - procedural finality applies where no appeal is filed by either side against the partial allowance. Conclusion: The partial allowance for Speed Post was left undisturbed on procedural grounds; the Tribunal did not decide as a matter of law whether Speed Post collections are deposit or tax given the absence of challenge to the allowance. CROSS-REFERENCES AND OVERALL CONCLUSION Cross-reference: Issue 1 and Issue 2 are interdependent - entitlement under the Notification is subject to the temporal requirement analyzed under Issue 2; Issue 3 is distinct but its resolution was rendered moot procedurally. Overall conclusion: The Tribunal affirms that refund under Notification No.41/2012 is subject to the Notification's conditions and the one-year limitation of Section 11B (as applied). Refund claims relating to freight, banking and other financial services filed on 06.06.2018 for exports in 2013-2014 are barred by limitation and must be dismissed; the partial refund allowed in respect of Speed Post remains undisturbed by the Tribunal because the Revenue did not challenge that allowance.