Service tax refund allowed on input services used in export of goods despite government's initial denial

CESTAT Mumbai allowed the appeal regarding service tax refund on input services used in export of goods. The appellant sought refund for services provided by commission agents located outside India for the period April 2008 to December 2008. The tribunal held that service tax on input services used in exports must be refunded to maintain level playing field in international markets. The government's notification dated 07.07.2009 and subsequent instructions dated 01.01.2010 clarified that refund benefits extend to earlier periods. The appellant fulfilled both conditions - filing within one year and declaring no prior refund claims. The tribunal set aside the original order denying refund of Rs.16,17,016/- and allowed the appeal.

---

---

Issues Involved:
1. Admissibility of the refund claim filed on 31.03.2010 for service tax paid on services provided by the Commission Agency located outside India for the period April 2009 to June 2009.
2. Whether the refund claim filed on 31.03.2010 is time-barred.

Issue-wise Detailed Analysis:

1. Admissibility of the Refund Claim:
The appellants, engaged in the export of goods, filed refund claims for input services under Notification No. 41/2007-S.T. dated 06.10.2007. The original authority rejected part of the refund claims, which was upheld by the Commissioner (Appeals-IV). The Tribunal, in its Final Order No. A/2563-2564/15/SMB dated 17.06.2015, remanded the matter for fresh consideration, noting that the condition of non-availment of drawback was omitted by Notification No. 33/2008-ST dated 07.12.2008, and the refund claims were within the stipulated time. In the de novo adjudication, the original authority sanctioned part of the refund but rejected Rs. 16,17,016/- for the period April 2009 to June 2009, which was upheld by the Principal Additional Director General (ADG), DGPM. The Tribunal, upon direction from the Bombay High Court, reconsidered the matter and found that the appellants fulfilled the conditions stipulated in the instructions dated 01.01.2010, which clarified that the refund scheme under Notification No. 17/2009-S.T. dated 07.07.2009 applies to exports prior to its issuance, provided the refund claim is filed within one year and no previous refund claim was filed. The Tribunal concluded that the appellants are legally entitled to the refund of Rs. 16,17,016/-.

2. Time-barred Refund Claim:
The original authority and the Principal ADG, DGPM, rejected the refund claim on the grounds of being time-barred. However, the Tribunal noted that the refund claim for the period April 2009 to June 2009 was filed on 31.03.2010, which is within the stipulated one-year period as per the instructions dated 01.01.2010. The Tribunal emphasized that the refund claim was filed within the permissible time frame and that the conditions for such refund claims were met, thus overturning the previous decisions and allowing the refund.

Conclusion:
The Tribunal set aside the impugned order dated 18.05.2018, allowing the refund claim of Rs. 16,17,016/- for service tax paid on services provided by the Commission Agency located outside India for the period April 2009 to June 2009. The appeal filed by the appellant was allowed in their favor.

---