2026 (2) TMI 235 - AT - Service Tax

Specified services and exportlinked refund claims: retrospective expansion under Notification No.1/2016ST allows HO services; remand for invoice verification.

Retrospective amendment by Notification No.1/2016-ST expands the scope of specified services to include services used at head office/corporate office for ... Specified services - retrospective amendment of notification No.1/2016-ST - nexus with export - time-bar - one year from date of export - no quarter-wise restriction under Notification No.41/2012-ST - remand for limited verification of invoices - principles of natural justice - claims of service tax paid on input services used for export of goods - HELD THAT:- While the legal eligibility is established, we observe that detailed invoice-wise verification has not been carried out. The Appellant must demonstrate as to the authenticity of invoices, nexus with export-related activities and filing within one year of the date of export. As no invoices/SB’s are placed before us, for verification, this aspect requires remand. We find that Notification No. 41/2012-ST imposes only one condition i.e. the claim must be filed within one year from the date of export. There is no quarter-wise restriction (unlike Notification 27/2012-CE). Thus, an invoice pertaining to another quarter cannot be rejected if the claim is filed within one year of export and the nexus is shown. We find that the LAA erred by importing the procedural framework of Notification No. 27/2012-CE and the absence of specific invoice/shipping bill-wise reasons in the impugned order strengthens the Appellant’s case. Accordingly, the findings on time-bar and quarter-wise mismatch are unsustainable and this aspect also requires remand. Finally, we conclude that Notification No. 1/2016-ST applies retrospectively and expands the meaning of “specified services.” Services used at Head Office/corporate office for export qualify for refund. The impugned rejection of HO-related services is contrary to law. The rejections based on time-bar or quarter mismatch are legally unsustainable and requires to be verified in light of our above directions. Therefore the matter requires limited remand for verification of documents and nexus with Exports. The Impugned Orders-in-Appeal Nos. 52-56/2021(CTA-I) dated 16.04.2021, insofar as they reject refunds on the basis of the pre-2016 interpretation of Notification No. 41/2012-ST or on quarter mismatch/time-bar grounds, are set aside. Thus, the Appeals are allowed on the terms and remanded with directions. Issues: (i) Whether Notification No.1/2016-ST (retrospectively effective) expands the meaning of 'specified services' under Notification No.41/2012-ST to include input services used at head office/corporate office (places other than the factory/place of manufacture) for export of goods; (ii) Whether portions of the refund claims were correctly rejected as time-barred (filed after one year from date of export) or because invoiced amounts belonged to quarters other than the quarter for which refund was sought.Issue (i): Whether Notification No.1/2016-ST expands the definition of 'specified services' to include services used at head office/corporate office for export of goods.Analysis: Notification No.1/2016-ST substituted the definition of 'specified services' to 'Taxable services that have been used beyond the factory or any other place or premises of production or manufacture of said goods for their exports' and was given retrospective effect from 01.07.2012 by clause 157 of the Finance Bill 2016. The Tribunal examined the Principal Bench decision in Bharat Mines & Minerals which rejected a pre/post-export segregation and held that the test is whether the service is used beyond the place of manufacture and for export. Applying that ratio, services provided at head office that are used beyond the factory and connected to export activities (e.g., renting of premises, telephony, security, professional/IT services, repair & maintenance, C&F support) fall within the amended definition, subject to documentary proof of nexus.Conclusion: In favour of the Assessee. Notification No.1/2016-ST (retrospectively) expands 'specified services' to include head-office/corporate-office services used beyond the place of manufacture for export, subject to verification of nexus and invoice authenticity.Issue (ii): Whether rejections on grounds of time-bar (claims filed after one year from export) or quarter-wise invoice mismatches were justified.Analysis: Notification No.41/2012-ST requires claims to be filed within one year from the date of export and does not impose quarter-wise filing constraints akin to Notification No.27/2012-CE. The impugned orders imported quarter-wise procedural restrictions from Notification No.27/2012-CE and failed to give invoice/shipping-bill-wise reasons. The Tribunal found no substantive invoice-wise verification on record and therefore remanded for checking filing within one year and nexus with export, holding that quarter-wise mismatch is not a ground for rejection where the one-year condition is met and nexus established.Conclusion: In favour of the Assessee. Rejections based on quarter-wise mismatch or alleged time-bar are unsustainable and require fresh verification of invoices against the one-year filing requirement and nexus with export.Final Conclusion: The impugned rejections founded on the pre-2016 interpretation of Notification No.41/2012-ST and on quarter/time-bar grounds are set aside; the matters are remanded to the Lower Adjudicating/Refund Sanctioning Authority for limited invoice-wise verification (authenticity, nexus with export, and filing within one year) and thereafter refunds shall be sanctioned, if due, applying Notification No.41/2012-ST as amended by Notification No.1/2016-ST, following principles of natural justice.Ratio Decidendi: Notification No.1/2016-ST, given retrospective effect from 01.07.2012, clarifies that 'specified services' under Notification No.41/2012-ST are taxable services used beyond the factory or place of production for exports; such services (including head-office/corporate-office services) qualify for refund subject to documentary proof of nexus and compliance with the one-year filing condition.