TaxTMI 
TaxTMI 
2024 (4) TMI 1313
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....-ST dated 29.06.2012. 2.1 Appellants are engaged in export of leather footwear and finished leather for which he procures orders through various commission agents appointed by him abroad. In terms of the agreement entered between the appellant and the commission agent, after the receipt of payments against the export orders. 2.2 Appellant followed the due procedure and was claiming the exemption under the said notifications by way of indicating the details as required onl the shipping bills filed by them and subsequently by filing EXP-2 or EXP-4 as prescribed by the said notification. 2.3 While filing the said returns EXP-2 or EXP-4, appellants would indicate only those shipping bills against which he has already received the payments and also made payments to the commission agents as per his understanding of the said two notifications. In the process some of shipping bills which were for the prescribed period of return went into the next period of return. 2.4 Revenue authorities were of the view that exemption in such cases would not be admissible to the appellants. 2.5 Show cause notices dated 09.10.2012 and 10.10.2013 were issued to the appellants proposing to den....
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....16.04.2013 under their Diary Receipt No. 2676 and 1125 respectively. Subsequently, the same have been onward transmitted to the jurisdictional Superintendent, Service Tax Range-XIX Kanpur. From the perusal of both the said returns EXP-4, for first time, it has come to notice of the Range that the party has availed he benefit of the said exemption in respect of taxable services i.e. "Business Auxiliary Services" which have been rendered by their "foreign commission agents/foreign service providers" and used by them for export of goods viz., "leather footwear and finished leather" during the period from 05.10.2011 to 11.06,2012 and 19.07.2012 to 22.01.2013 [i.e. both dates inclusive and indicating the date of "LET EXPORT ORDER"] covered under the shipping bills as detailed in Table A of EXP-4 return filed on 16.10.2012. It also came to notice that the dates mentioned at serial no 1 to 7 pertained to previous period and the relevant date of filing the return in respect of shipping bills at SI.No.1 to 7 was 15.04.2012. Further, export orders covered under shipping bills as detailed in Table A of form EXP-4 return filed on 16.04.2013; the dates from serial no. 1 to 17 and serial No. 21 ....
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.... service tax availed] during the six months ending 30.09.2012". It means that the party has claimed the said exemption from payment of service tax in respect of all the exports made by them during the period from 01.04.2012 to 30.09,2012. But, from the perusal of the said return, it is clearly evident that exports at serial no, 1 to 7 have not been made by them during this period. As per details provided in the said return, these exports have been made by the party under respective shipping bills as mentioned at Sl. No. 1 to 7 of Table A during the period from 05.10.2011 to 27.01.2012 b. In the Table-B, instead of providing the details of invoices [i.e. "Invoice No. & Date"] raised by "Foreign Service Providers" to them as customer; they have deliberately left the column blank. When the party was asked by the Range Superintendent to provide the copies of the same; the party has not provided the same to the jurisdictional Range. Even the party did not bother to reply the letter issued by range Superintendent dated 15.05.2013 and 18.06.2013. Further, in the instant case, agency commission has been paid to "Foreign Service Providers" after considerable lapse of time. in order....
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....ion from payment of service tax on the specified services viz. services provided by a foreign commission agent(s) is available subject to ftulfllmnent of terms & conditions laid down in the Notification No. 18/2009-ST dated 07.07.2009 and Notification No. 42/2012-ST dated 29.06.2012 10.1 Whereas, from the perusal of said EXP-4 returns, it appears that the party has made the exports of leather footwear and finished leather during the period 05.10.11 to 11.06.12 (i.e. both dates inclusive and indicating of the date of "LET EXPORT ORDER"] covered under the shipping bills mentioned at Sl.No. from 1 to 14 in Table "A" of the said EXP-4 return and during the period 19.07.2012 to 22.01.2013 covered under shipping bills mentioned at serial no. 1 to 28. Hence only serial no. 8 to 14 of Table A to EXP-4 dated 15.10.2012 and serial no. 18 to 20 and 22 to 28 of Table A to EXP-4 dated 15.04.2013 pertained to return period. 10.2. Whereas, in no case, the exemption from payment of service tax availed on services of foreign commission agents by the party in respect of exported goods; the date of let export orders of such goods exported under. various shipping bills as per det....
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....y has been paid to Foreign Service Providers". On said amount of commission, the party has not discharged the Service Tax liability _ amounting to Rs. 6,46,346/- (S.Tax @ 12% adv i.e. Rs. 6,27,521/-+ Ed Cess @ 2% of S.Tax i.e. Rs. . 12,550/-+ H. Ed. Cess @ 1% of S.Tax Rs. 6,275/- 10.6. Whereas, prior to the enactment of "Point of Taxation Rules, 2011" vide Notification No. 18/2011-ST dated 01.03.2011 (w.e.f. 01.04.2011); the party as a recipient of Taxable Services is required to pay the Service Tax on such amount of commission, only when such commission has been paid to the service providers. 10.7. Whereas, in the instant case "Point of Taxation" has no relevance for the purpose of determining the date of applicability of such exemption. The date of fling the declaration in Form EXP-1 and EXP-3 is crucial date i.e. on and after that exemption can be availed by the party under the ibid notifications subject to fulfillment of other conditions viz. fling of Form EXP-2 and EXP-4 returns within the stipulated period. Even, after fling the declaration in Form EXP-1 and EXP-3, if no exemption has been claimed the party is required to file the „Nil&#....
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....s Garg learned Chartered Accountant appearing for the appellants and Shri Manish Raj learned Authorised Representative appearing for the revenue. 3.2 Arguing for the appellant learned Chartered Accountant submits that- ⮚ the main contention for allowing the commission under this notification is that export orders should have been procured through the commission agents to whom and the relevant details indicated on the shipping bills filled by the appellant at the time of exportation. ⮚ The next condition is that the return should have been filled in the form of EXP-2 and EXP-4 indicating the details of shipping bills and the payment made to the commission agents was nothing but a procedural requirement to operate the said notification. Admittedly, in certain cases, as per the agreement with the commission agents the payments were made subsequent to the return period and appellants have indicated those shipping bills against which payments were made in the subsequent return period in that period as a mandatory condition of the notification had been complied with, the substantial benefit admissible to them under this notification should not have been....
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....pellant's claims in respect or exemption from the payment of service tax relating to shipping bills listed in the claims are time barred except for the period 01.4.2012 to 11.6.2012 in the claim filed by the appellant on 15.10.2012 and except for the period 01.10.2012 to 22.01.2013 in the claim filed on 15.4.2013. 10. Reliance is placed on the following Case Laws :- (i) S.B. Logistics Vs. Commissioner of C.EX., Cus, & S.T., Belgaum 2016(41) S.T.R. (Tri.-Bang.) - Relevant portion of Para 2.2 of the case is reproduced below :- ".........................................Further, the exporter is also required to file the returns in Form EXP-2 every six months of the financial year within 15 days of the completion of the said six months. goods. The EXP-2 returns relates to the fact of actual export of the goods................................" (ii) D.D. International Vs. Commissioner of Service Tax, Delhi 2016 (41)S.T.R. 868 (Tri.- Del.) Relevant portion of Para 3 of the case is reproduced below:- 3. We have considered the contentions of the appellant. We find that condition (c) contained in the proviso to the Notification No. 18/2009-ST r....
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....erely technical interpretation of procedures. In Suksha International v. UOI - 1989(01)LCX0044 the Hon'ble Apex Court has observed that an interpretation unduly restricting the scope of beneficial provision is to be avoided, so that it may not take a way with one hand, what the policy gives with the other. The Hon'ble Apex Court in Mangalore Chemicals and Fertilizers Ltd. v. Dy. Commissioner, 1991(08)LCX0031 while drawing a distinction between procedural condition of a technical nature and substantive condition, held that procedural conditions of technical nature can be condoned. The procedures prescribed in the notification are to facilitate verification of the claims. Since there is no dispute with regard to the export made or the service tax paid, the non-fulfillment of the conditions in my view is condonable. Following the judgments laid in the above cases, I am of the view that the non-fulfillment of the conditions is only a procedural lapse and can be condoned. In view thereof, I hold that the appellants are eligible for refund. (ii) In another case of Radiant Textiles Itd. Versus Commissioner of C. Ex., Chandigarh-II reported at 2017 (047) STR 0195 (Tri. Cha....
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.... (2) The exemption shall be limited to the service tax calculated on a value of ten per cent of the free on board value of export goods for which the said service has been used. (3) The exemption shall not be available on the export of canalized item, project export, or export financed under lines of credit extended by the Government of India or EXIM Bank, or export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary. (4) The exporter shall submit with the half-yearly return after certification of the same as specified in clause (g) of the proviso- (i) the original documents showing actual payment of commission to the commission agent; and (ii) a copy of the agreement or contract entered into between the commission agent located outside India and the exporter in relation to sale of export goods outside India: Provided that- (a) the exemption shall be available to an exporter who,- (i) informs the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory or the regional office or ....
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....e mandatory conditions of this notification the exemption should have been claimed by the appellant by way of indication of details of the commission paid or being paid on the shipping bills filed by the appellant. Conditions specified in column 4 of the table in notification are mandatory whereas those specified are procedural in nature. Appellant has complied with the conditions as specified in column 4 and hence is eligible to benefit of this notification. It is settled law that an exemption notification should at the stage of entry to be interpreted in a very strict manner but once it is held that the appellant falls within the parameters of the notification, the notification should be interpreted regularly so as not to disallow the substantial benefits of notification for certain procedural irregularities. Reference is made through the decision of Hon'ble Supreme Court in the case of M/s Dilip Kumar & Company 2018 (361) ELT 577 (SC) wherein following has been held:- "27. Now coming to the other aspect, as we presently discuss, even with regard to exemption clauses or exemption notifications issued under a taxing statute, this Court in some cases has taken the view tha....
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....eriod or with the specific objective, etc. That is why its construction, unlike charging provision, has to be tested on different touchstone. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principles requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature 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...‟‟ (emphasis supplied) 36. In Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commissioner of Commercial....
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....o need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the one stated by this Court in Union of India v. Wood Papers Ltd. [(1990) 4 SCC 256 = 1990 SCC (Tax) 422 = JT (1991) SC 151]." Three important aspects which comes out of the discussion are the recognition of horizontal equity by this Court as a consideration for application of strict interpretation, subjugation of strict interpretation to the plain meaning rule and interpretation in favour of exclusion in light of ambiguity. 38. We will now consider another Constitution Bench decision in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal, (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.) [hereinafter referred as „Hari Chand case‟ for brevity]. We need not refer to the facts of the case which gave rise to the questions for consideration before the Constitutional Bench. K.S. Radhakrishnan, J., who wrote the unanimous opinion for the Constitution Bench, framed the question, viz., whether manufacturer of a specified final product falling under Schedule to the Central Excise Tariff Act, 1985 is eligible to get the benefit of exemption....
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....ature. A distinction between the provisions of a statute which are of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in there nature, on the other, must be kept clearly distinguished... Doctrine of substantial compliance and "intended use" 32. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or the "substance" of the requirements. Like the concept of "reasonableness", the acceptance or otherwise of a plea of "substantial compliance" depends upon the facts and circumstances of each case and the purpose and object to be achieved and the context of the pre-requisites which are essential to achieve the object and purpose of the rule or the regulation. Such a defence cannot be pleased if a clear statutory pre-requisite which effectuates the object and the purpose of the statute has not been met. Certainly, it means that the Court sh....
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......... 44. In Hansraj Gordhandas case (supra), the Constitutional Bench unanimously pointed out that an exemption from taxation is to be allowed based wholly by the language of the notification and exemption cannot be gathered by necessary implication or by construction of words; in other words, one has to look to the language alone and the object and purpose for granting exemption is irrelevant and immaterial. 45. In Parle Exports case (supra), a Bench of two-Judges of this Court considered the question whether nonalcoholic beverage base like Gold spot base, Limca base and Thumps Up base, were exempted from payment of duty under the Central Government notification of March, 1975. While considering the issue, this Court pointed out the strict interpretation to be followed in interpretation of a notification for exemption. These observations are made in para 17 of the judgment, which read as follows : "How then should 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, imposi....
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....x has to be construed strictly against those who invoke for their benefit. This was explained in a subsequent decision in Wood Papers Ltd. case (supra). In para 6, it was observed as follows : "... In Collector of Central Excise v. Parle Exports (P) Ltd., (1989) 1 SCC 345, this Court while accepting that exemption clause should be construed liberally applied rigorous test for determining if expensive items like Gold Spot base or Limca base of Thums Up base were covered in the expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held „that it should not be in consonance with spirit and the reason of law to give exemption for non-alcoholic beverage basis under the notification in question‟. Rationale or ratio is same. Do not extend or widen the ambit at stage of applicability. But once that hurdle is crossed construe it liberally. Since the respondent did not fall in the first clause 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 de....
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....sent case the only dispute which is to decide upon is whether the substantial benefit of the exemption should have been denied to the appellant for the reason that they have made payment to the commission agent as per there agreements with the commission agents subsequent to the period of the prescribed period of return. In case of Radiant Textiles Ltd. [2017 (47) STR 195 9T-Chand)], interpreting Notification No 18/2009-ST dated 07.07.2009 Chandigarh bench has observed as follows: "9. The facts of the case are not disputed that the appellant is receiving service of overseas commission agent and paying commission to the said agent. The benefit of notification has been denied due to reason that the appellant has not produce BRC and have not filed original copy of invoices and the return form the EXP-1 and EXP-2. In fact, the basic of requirement of notification has not been disputed by the Revenue, therefore, substantive benefit cannot be denied on account of technical lapses has held by the Hon‟ble High Court of Bombay in the case of Union of India v. Farheen Texturisers (supra). Further by the Hon‟ble High Court of Allahabad in the case of J.S. Gupta & Sons (su....
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....the case of Coromandel Stamping & Stones Limited v. CCE & ST, Hyderabad-II reported at 2016 (43) S.T.R. 221 (Tri. - Hyd.). It was observed that non-filing of EXP-1 and EXP- 2 as required under exemption Notification No. 18/2009-S.T. is only a procedural lapse will not result in denial of substantive benefit otherwise available in terms of notification. To the same effect is another decision of the Tribunal in the case of Radiant Textile Ltd. v. Commissioner of Central Excise, Chandigarh-II reported at [2017 (47) S.T.R. 195 (Tri. - Chan.)" In another case of Praj Industries Ltd. v. Commissioner of Central Excise, Pune-II [2017 (3) G.S.T.L. 341 (Tri. - Mum.) has held as under; "3. Reading of the notification shows that the above conditions are regulatory in nature and not mandatory to avail the exemption. If the procedure prescribed is not fulfilled there would be no consequence of denial of the benefit of the notification. It is stated that taxing the goods denying the notification benefit shall make the export goods non-competitive in the global trade, which is contrary to basic principle of WTO. Accordingly, looking to the gravity of the conditions as well as the....
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.... return for compliance verification by the department, the appellant did not show the much-needed promptness. We find that the department had issued several reminders for filing the said return, but the appellant did not feel it necessary to respond to these letters. Our attention was drawn to the earlier decision of this Tribunal in the Appellant's own case HEG Ltd. v. Commissioner of Customs, Central Excise & Service Tax, Bhopal [2019] (7) TMI 773-CESTAT, New Delhi]. The benefit of the exemption notification was extended to the appellant despite their delay in filing the required returns. The Tribunal opined that the mere procedural lapse which admittedly is on account of non availability of shipping bills due to delay on the part of Customs cannot be the ground to deny the substantial benefit of the notification. As has been observed previously, the appellant was very prompt when seeking the exemption under the said notifications, but did not show similar promptness while filing returns. It is also seen that while filing the returns, the appellant did not take due care to file the data/documents as required, despite having undertaken to file the same. The appellant can be ex....