TaxTMI 
TaxTMI 
2023 (10) TMI 1175
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....cedure specified in paragraph 3; (c) the rebate under the procedure specified in paragraph 3 shall not be claimed wherever the difference between the amount of rebate under the procedure specified in paragraph 2 and paragraph 3 is less than twenty per cent of the rebate available under the procedure specified in paragraph 2. 4.4.1 Since in this case, the appellant had filed the rebate under Para 3 of the said notification and it was observed by the Adjudicating Authority that the difference in respect of each of the shipping bills, between the amount of rebate under the procedure specified in paragraph 2 and paragraph 3 was less than twenty per cent of the rebate Available under the procedure specified in paragraph 2. Since the details & the documents are to be filed shipping bill wise, the time limitation of one year, as per Para 3(g) of the said notification, is within one year of the date of 'Let Export Order' which may vary from shipping bill to shipping bill and also the exporters are not required to file refund claim for a certain period (i.e., fortnightly, monthly, quarterly etc.), I find that there is no merit in the submission of the appellant that the said not....
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....) of Para 3(h) of the said notification, I find that the appellant during the adjudication proceedings had submitted that they had complied with the requirement of certification by the Chartered Accountant and as such, they cannot be denied the refund in respect of such shipping bills. 5. Thus, I hold that the appellant are not eligible for refund of the Service Tax, wherever they have not provided the original invoices of the service providers mentioned in Para 1 of the Show Cause Notice dated 28.11.2014 and in respect of shipping bills mentioned in Paras 2 & 3 of the Show Cause Notice dated 28.11.2014. The appeal filed by the appellant is disposed off accordingly." 2.1 Appellant had filed a refund claim of Rs.13,72,858/- under Para 3 of Notification No.41/2012-ST dated 29.06.2012 before the Assistant Commissioner, Mirzapur on 30.09.2014 claiming refund of service tax paid on taxable services namely Clearing & Forwarding Agent Service, Banking & Other Financial Service, Courier Service and Customs House Agent Service, used for export of their final product. 2.2 During the scrutiny of the refund claim, it was observed that appellant had not submitted original invoices in some c....
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....isfied in respect of all the shipping bills filed by them during the period. In any case, if the Commissioner (Appeals) used to be accepted then also the matter needs to be re-determine for the reason that in most of the shipping bills this condition is satisfied. Commissioner (Appeals) has also gone beyond the scope of the appeal and the order under challenge. He has decided the issue against them by referring to the issues raised in the show cause notice which were never the grounds for denial of the refund to them as per the order appealed against. Accordingly, the Order-in-Appeal is bad in law and should be set aside. 3.3 Arguing for the respondent-Revenue Learned Authorised Representative reiterates the findings referred in the impugned order. 4.1 I have considered the impugned order along with the submissions made in the appeal and during the course of argument. 4.2 The text of Notification No.41/2012 is reproduced bellow:- "G.S.R. (E).-In exercise of the powers conferred by section 93A of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of the notification of the Government of India in the Ministry of Finance (Department o....
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....ed under the provisions referred to in clause (a), shall register his service tax code number and bank account number with the customs; (c) service tax code number referred to in clause (b), shall be obtained by filing a declaration in Form A-2 to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the registered office or the head office, as the case may be, of such exporter; (d) the exporter shall make a declaration in the electronic shipping bill or bill of export, as the case may be, while presenting the same to the proper officer of customs, to the effect that- (i) the rebate of service tax paid on the specified services is claimed as a percentage of the declared Free On Board(FOB)value of the said goods, on the basis of rate specified in the Schedule; (ii) no further rebate shall be claimed in respect of the specified services, under procedure specified in paragraph 3 or in any other manner, including on the ground that the rebate obtained is less than the service tax paid on the specified services; (iii) conditions of the notification have been fulfilled; (e) service tax paid o....
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....nt Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the registered office or the head office, as the case may be, in Form A-1; (g) the claim for rebate of service tax paid on the specified services used for export of goods shall be filed within one year from the date of export of the said goods. Explanation .- For the purposes of this clause the date of export shall be the date on which the proper officer of Customs makes an order permitting clearance and loading of the said goods for exportation under section 51 of the Customs Act, 1962(52 of 1962); (h) where the total amount of rebate sought under a claim is upto 0.50% of the total FOB value of export goods and the exporter is registered with the Export Promotion Council sponsored by Ministry of Commerce or Ministry of Textiles, Form A-1 shall be submitted along with relevant invoice, bill or challan, or any other document for each specified service, in original, issued in the name of the exporter, evidencing payment for the specified service used for export of the said goods and the service tax paid thereon, certified in the manner specified in sub-cl....
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....e of service tax paid on the specified services has been allowed to an exporter on export of goods but the sale proceeds in respect of said goods are not received by or on behalf of the exporter, in India, within the period allowed by the Reserve Bank of India under section 8 of the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, such rebate shall be deemed never to have been allowed and may be recovered under the provisions of the said Act and the rules made thereunder; (5) This notification shall come into effect on the 1st day of July, 2012." 4.3 On perusal of the above notification it is quite evident that the person claiming the benefit of this notification, will get rebate of the service tax paid either on the basis of prescribed rates as per (2) or the basis of actual service tax paid in respect of specified services used for exporting the goods. The notification itself prescribes the procedures for claiming the rebate and also prescribes the conditions to be fulfilled for claiming the benefit of this notification either under (2) or (3) of the notification. 4.4 Condition (c) of the first proviso prescribes that procedure unde....
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.... 29. The first case with which we need to concern ourselves is the case in Union of India v. The Commercial Tax Officer, West Bengal and Ors. - AIR 1956 SC 202. It may be noted that this case was dealt with by five Learned Judges of this Court resulting in two different opinions; one by the then Chief Justice of India, S.R. Das for the majority, and Justice B.P. Sinha (as His Lordship then was) rendering minority view. The question before this Court was whether the sale of goods made by one private mill to the Government of India, Ministry of Industries and Supplies were to be deducted as taxable turnover of the mill for the exemption given under Section 5 of the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941). The exemption under Section 5(2)(a)(iii) of the Bengal Finance (Sales Tax) Act, 1941 provided for exemption 'to sales to the Indian Stores Department, the Supply Department of the Government of India, and any railway or water transport administration'. The Court was to interpret the aforesaid provision in order to ascertain whether the sale to the Government of India, Ministry of Industries and Supplies would be covered under the Section. 30. The majority was....
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....which is clear from the following passage : "The judgment under appeal is based chiefly on the consideration that the exemption clause in question does not in terms refer to the newly created department which now goes by the name of the Ministry of Industry and Supply. But this department insofar as it deals with industry, is not concerned with the main purchasing activities of the Government of India. The exemption was granted in respect of the purchasing activity of the Government of India and that function continues to be assigned to the Supply Department which has now become a wing of the newly created department of the Government. The question therefore arises whether in those circumstances the Government of India could claim the benefit of the exemption. The High Court in answering that question in the negative has gone upon mere nomenclature. It has emphasized the change in the name and overlooked the substance of the matter." 33. The minority construed 'strict interpretation' to be an interpretation wherein least number of "determinates in terms of quantity" would fall under the exemption. The minority referred to an old English case of Commissioner of Inland Revenue v.....
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....ns of sale, the Government of Bengal in all fairness should have allowed the purchasing agency of the Government of India the benefit of the exemption until that benefit was in terms withdrawn sometimes in the beginning of 1949." 34. In Hansraj Gordhandas v. H.H. Dave, Asst. Collector of Central Excise & Customs, Surat and Ors., AIR 1970 SC 755 = (1969) 2 SCR 253 = 1978 (2) E.L.T. J350 (S.C.) [hereinafter referred as Hansraj Gordhandas case' for brevity], wherein this Court was called upon to interpret an exemption notification issued under the Central Excise Act. It would be relevant to understand the factual context which gave rise to the aforesaid case before the Court. The appellant was sole proprietor who used to procure cotton from a co-operative society during the relevant period. The society had agreed to carry out the weaving work for the appellant on payment of fixed weaving charges at Re. 0.19 np. per yard which included expenses the society would have to incur in transporting the aforesaid cotton fabric. In the years 1959 and 1960, the Government issued an exemption notification which exempted cotton fabrics produced by any co-operative society formed of owners of cot....
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....lication.' It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus. As appears in the judgment of the Privy Council in Crawford v. Spooner. '.... we cannot aid the Legislature's defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there.' Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to powerlooms by constituting themselves in co-operative Societies. But the operation of the notifications has to be judged not by the object which the rule making authority had in mind but by the words which it has employed to effectuate the legislative intent." 35. In the judgment of two Learned Judges in Union of India v. Wood Papers Limited, (1990) 4 SCC 256 = 1990 (47) E.L.T. 500 (S.C.) [hereinafter referred as Wood Papers Ltd. case' for brevity], a distinction between stage of finding out the eligibility to seek exemption and stage of applying the nature of exemption was made. Relying on the decision in Collector of Central ....
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....he refunds were eligible to be adjusted against sales tax payable for respective years. The only controversy was whether the appellant, not having actually secured the "prior permission" would be entitled to adjustment having regard to the words of the Notification of August 11, 1975, that "until permission of renewal is granted by the Deputy Commissioner of Commercial Taxes, the new industry should not be allowed to adjust the refunds". The contention of the appellants therein was that the permission for the three years had been sought well before the commencement of the respective years but had been withheld for reasons which were demonstrably extraneous. Therefore, contention was that if, in these circumstances, the Deputy Commissioner could withold the permission. 37. This Court while accepting the interpretation provided by the appellant, observed on the aspect of strict construction of a provision concerning exemptions as follows : "... There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other unexempted class of taxpayers and should be construed against the subject in case of ambiguity. It is an equ....
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.... principles qua the test of construction of exemption clause, the mandatory requirements to be complied with and the distinction between the eligibility criteria with reference to the conditions which need to be strictly complied with and the conditions which need to be substantially complied with. The Constitution Bench followed the ratio in Hansraj Gordhandas case (supra), to reiterate the law on the aspect of interpretation of exemption clause 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, thought at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in natur....
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....atory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted. 34. 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....
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....omponents of a taxing statute, namely subject of the tax; person liable to pay tax; and the rate at which the tax is to be levied. If there is any ambiguity in understanding any of the components, no tax can be levied till the ambiguity or defect is removed by the legislature [See Mathuram Agrawal v. State of Madhya Pradesh, (1999) 8 SCC 667; Indian Banks' Association v. Devkala Consultancy Service, (2004) 4 JT 587 = AIR 2004 SC 2615; and Consumer Online Foundation v. Union of India, (2011) 5 SCC 360.]. 43. There is abundant jurisprudential justification for this. In the Governance of rule of law by a written Constitution, there is no implied power of taxation. The tax power must be specifically conferred and it should be strictly in accordance with the power so endowed by the Constitution itself. It is for this reason that the Courts insist upon strict compliance before a State demands and extracts money from its citizens towards various taxes. Any ambiguity in a taxation provision, therefore, is interpreted in favour of the subject/assessee. The statement of law that ambiguity in a taxation statute should be interpreted strictly and in the event of ambiguity the benefit should ....
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....ould the Courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India, 1962 Supp 3 SCR 481 = AIR 1963 SC 98. See also Kailash Nath v. State of U.P., AIR 1957 SC 790. The principle is well-settled that when two views of a....
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....lause of the notification there was no question of giving the clause a liberal construction and hold that production of goods by respondent mentioned in the notification were entitled to benefit." 46. The above decision, which is also a decision of two-Judge Bench of this Court, for the first time took a view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. The question whether a subject falls in the notification or in the exemption clause, has to be strictly construed. When once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The ratio of Parle Exports case (supra) deduced as follows : "Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed, construe it liberally". 47. We do not find any strong and compelling reasons to differ, taking a contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by the Constitution Bench in Hari Chand case (supra)." 4.5 After taki....
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....generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, for the reasons given by us, we agree with the conclusions reached by the impugned judgments of the Division Bench and the Full Bench." 4.6 From the notification 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 th....