TaxTMI 
TaxTMI 
TaxTMI 
2016 (9) TMI 636
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....o.41/2007-ST, dated 6-10-2007, for the exports made during the period from January, 2008 to March, 2008, in relation to the service tax paid on the transport of goods by road (GTA) services. 4. The original Notification No.41/2007, dated 6-10-2007, did not attach any conditions for the grant of the benefit of exemption under Section 65 (105) (zzp) in relation to the services provided for transport of certain goods from the inland container depot to the Port of Export. But by an amendment to the said notification, under Notification No.3/2008-ST, dated 19-2-2008, 4 conditions were imposed in relation to the same services, for the grant of the benefit of exemption. One of the conditions so imposed was that the details of exporters invoice relating to the export goods should be specifically mentioned in the lorry receipt and the corresponding shipping bill. 5. Since the respondent/Assessee did not fulfil the aforesaid condition, the refund claim made by the respondent was rejected by the Deputy Commissioner of Service Tax by an order in original dated 2.2.2010. 6. The respondent/Assessee filed 3 appeals as against the rejection of 3 different claims for refund. All the 3 appeals in....
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....17th September, 2007, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in column (3) of the Schedule (hereinafter referred to as specified services) received by an exporter and used for export of goods (hereinafter referred to as said goods), from the whole of the service tax leviable thereon under Section 66 and Section 66A of the said Finance Act, subject to the conditions specified in the corresponding entry in column (4) of the Schedule: Provided that (a).. (b) . (c) . (d) . (e) (f) . 2. The exemption contained in this notification shall be given effect to in the following manner, namely:- (a) (b) (c) (d) (e) .. (f) the refund claim shall be accompanied by documents evidencing, - (i) export of the said goods: (ii) payment of service tax on the specified services for which claim for refund of service tax paid is filed; (iii) wherever applicable, a copy of the written agreement entered into by the exporter with the buyer of the said goods, as the case may be; SCHEDULE S.No. Taxable Services....
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....specified in the corresponding entry in column 4 of the Table under the Schedule; 2) that as per Paragraph 2 (f) of the exemption notification, which prescribes the procedure, the refund claim should be accompanied by the documents listed therein; and 3) that out of 7 taxable services which were exempt thereunder, 4 taxable services, listed in S.Nos.2, 5, 6 and 7, were exempt without any conditions attached thereto and the other 3 services made subject to the fulfilment of the conditions stipulated in column 4. In other words, the grant of exemption for 3 types of services, listed at S.Nos.1, 3 and 4 in the Table below the Schedule to the Notification, was made subject to the conditions stipulated in column 4 of the Table under the Schedule. But column 4 of the Table was left blank in respect of 4 types of taxable services listed in S.Nos.2 and 5 to 7. 13. Therefore, it is clear that as per the original notification of the year 2007, the services provided for the transport of goods from the inland container depot to the port of export, included in S.No.6 of the table under the Schedule, relating to Section 65 (105) (zzp), were entitled to exemption, unconditionally. Hence, if an....
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....east 3 out of those 4, are evidentiary in nature. While the 2nd condition relates to what should be found in the invoice, the 3rd condition relates to what should be found in the lorry receipt and the 4th condition relates to a declaration to be made by the exporter in the refund claim. 17. The grievance as well as the contention of the respondent/ Assessee is that in so far as the export of iron ore is concerned, the practice prevalent in the industry is to aggregate significant quantity of the materials at the port of export and to prepare the exporters invoice thereafter. This practice, according to the respondent, is attributed to the demand-supply factor inherent in the trade, where huge consignments are exported on short notice. The respondent claims that they have exported up to 40,000 tonnes of iron ore and the proportional usage of transport services is to the tune of 3,000 trucks, used to transport the goods from the place of removal to the port of export. Since there was no discrepancy noted in the total quantity of material exported and the extent of transport services utilized, it is claimed by the respondent/Assessee that there was substantial compliance with the exe....
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....rules of construction of exemption notifications. RULES OF CONSTRUCTION OF EXEMPTION NOTIFICATIONS 22. The rules of interpretation to be applied to exemption notifications are slightly different from the rules of interpretation applicable to the charging provisions. Way back in 1956, a Constitution Bench of the Supreme Court held (by a majority) in Union of India vs. Commercial Tax Officer {AIR 1956 SC 202} that "exemption is a creation of statute and must be construed strictly". Interestingly, that case before the Constitution Bench concerned an exemption under Section 5 of the Bengal Finance (Sales Tax) Act, 1941. Section 5(2)(a)(iii) of the Act exempted the sales to the Indian Stores Department and the Supply Department of the Government of India and any Railway Company from being included in the taxable turnover. The assessee claimed exemption in respect of the sales made to the Ministry of Industry and Supplies, Government of India. But by a majority, the Constitution Bench held that the various departments of the Government of India may have to be treated as distinct units or quasi legal entities and that at any rate, the Act in question treated two named departments of the....
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....ure of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction". 25. Holding that the above view represents the correct position of law, a three member Bench of the Apex Court, in Novopan India Ltd vs. Collector of Central Excise and Customs {1994 Supp. (3) SCC 606}, also referred to the opinion of Lord Halsbury, L.C., in IRC vs. James Forrest to the effect that all exemptions from taxation, to some extent increase the burden on other members of the Community. The Bench also referred to the observations of Cohen, L.J., in Littman vs. Barron to the effect that "the principle that in case of ambiguity, a taxing statute should be construed in favour of a tax payer does not apply to a provision giving a tax payer relief in certain cases from a section clearly imposing liability". After pointing out that the decisions expressing a contrary view do not reflect the correct position of law, the Bench held in para-16 as follows:- "The principle that in case of ambiguity, a taxing statute should be c....
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....ued liberally. An eligibility criteria therefore deserves a strict construction, although construction of a condition thereof may be given a liberal meaning." 29. In Southern Petrochemical Industries Co. Ltd vs. Electricity Inspector {2007 (5) SCC 447}, the court held that "the principle of construction of a statute that the exemption provisions would be attracted only when requisite conditions therefor are satisfied, would also apply in a case of constitutional interpretation". Application of Principles of law to the facts on hand 30. Having traced the nuances of the law relating to the construction of exemption notifications, let us now see the application of those principles to the facts of the cases on hand. 31. The main contention of the respondent/Assessee is that condition No.3 in the amended exemption notification is a mere matter of procedure and that therefore some amount of laxity can be given with regard to its compliance. According to the respondent/Assessee, they have satisfied the substantial requirements (1) of export of iron ore; (2) of payment of service tax on the service of transportation of material from the place of removal to the port; and (3) of actual ex....
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....he conditions stipulated in exemption notifications. 37. The answer to the above question is to be found very clearly in the decision of the Constitution Bench of the Supreme Court in Commissioner of Central Excise v. Hari Chand Shri Gopal (2011) 1 SCC 236. If we look at the facts of the case decided by the Constitution Bench, it is seen that the Assessees in the case before the Supreme Court were engaged in the manufacture of excisable goods, which became chargeable to the duty of excise with effect from 01.03.1994. The Assessee was transferring a major portion of the manufactured goods to certain companies, under the cover of transfer challans, describing them in a particular manner. The factory of the Assessee was raided by the Preventive Wing of the Excise Department and on the basis of what was found out, notices were issued. The Assessee claimed the benefit of exemption under a notification. But the claim was rejected and the demand was confirmed. On appeal, the Tribunal confirmed the findings of the adjudication officer, but directed re-examination of the question of applicability of the notification. At the time of re-examination by the adjudicating Commissioner, the Asses....
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....ntention raised before the Supreme Court in that case. As seen from para-17 of the report, the contention of the Assessee before the Supreme Court was that the conditions stipulated in Chapter-X are only procedural in nature, warranting liberal construction and that if there was substantial compliance and if the intended use of the goods had been established, then the benefit of exemption notification cannot be denied. 42. While dealing with the said contention, the Supreme Court opined in para-29 as follows: The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some r....
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....the Supreme Court held as follows: The test for determining the applicability of the substantial compliance doctrine has been the subject of a myriad of cases and quite often, the critical question to be examined is whether the requirements relate to the substance or essence of the statute, if so, strict adherence to those requirements is a precondition to give effect to that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance with those factors which are considered as essential. 45. Therefore, what can be condoned, is that which is not the essence of the thing to be done, but that which is prescribed merely for the orderly conduct of the business. In the case on hand all the four conditions stipulated in the amended notification, are intended to ensure that there are checks and balances for the authority conferred with the power of processing the application for exemption to arrive at....