can a service receiver claim refund of CHA services ?

PJ/CASE LAW/2015-16/2985

Case:- SHIVA UTENSILS INDUSTRIES PVT. LTD. VERSUS COMMISSIONER OF C. EX., NEW DELHI

Citation:- 2015 (40) S.T.R. 503 (Tri. - Del.)

Brief facts:-The appellants are in appeals against the impugned order rejecting the refund claims filed by them under Notification No. 17/2009-S.T., dated 7-7-2009.
The relevant facts of the case are that the appellants are a manufacturer of steel utensils and exporter of the same. The appellants filed certain refund claims under Notification No. 17/2009-S.T., dated 7-7-2009 for the Service Tax paid in respect of specified services received and used for the export of their final products from their factory. The said refund claims were examined on the basis of credit taken on the input services on the invoices issued by M/s. Exim Transtrade (India) Pvt. Ltd., M/s. R.R. Cargo and M/s. Team Global Logistics Pvt. Ltd. These suppliers of services are registered under CHA services. It was observed by the Revenue that since these suppliers of services are registered under CHA services, therefore, they are required to issue invoices for agency services and not on the reimbursable expenses such as port fees, landing and container charges, dock fees, examination charges, terminal handling charges, etc., for which the suppliers of the services are not registered. The refund claims of the said services supplied through above named suppliers are not entitled for refund claim, therefore, the refund claims rejected by both the lower authorities. Aggrieved with the said orders, the appellant filled an appeal.

Appellant’s contention: -Learned counsel appearing on behalf of the appellant submits that the suppliers of services are registered under CHA services but the appellant employed them for all the logistic services and also issued invoices to the appellant for the services provided by them and Service Tax has been paid on these services, which had been used for the purpose of export.Therefore, as per C.B.E. & C. Circular No. 106/9/2008-S.T., dated 11-12-2008, the refund cannot be denied and accordingly they are entitled to claim refund of Service Tax paid by them.
Case Cited:-
·        Durhan Spintex & Holding Pvt. Ltd.v. CCE, Ahmedabad - 2012 (28) S.T.R. 366 (Tri. - Ahmd.)
·        Dishman Pharma & Chemicals Ltd.- 2011 (21) S.T.R. 246 (Tri.)
·        Indoworth (India) Ltd.v. CCE, Nagpur - 2012 (25) S.T.R. 78 (Tri. - Mum.)
·        Sunflag Iron & Steel Co. Ltd.- 2010 (20) S.T.R. 213 (Tri. - Mum.).
Respondent’s contention:- Learned Counsel appearing on behalf of respondentobjected the contention of the learned counsel of appellant and submitted that the Commissioner (Appeals) has analysed the issue in detail and held that the impugned services have been provided by the CHA and the same has been classified under the head of agency services. Therefore, classification of the services which are impugned in question is wrong and the same cannot be termed as agency services and no proper invoices have been obtained by the appellant from the actual service providers. He further submits that C.B.E. & C.’s circular relied upon by the appellant has clarified that it should be ensured that the invoices/challans/bills issued by the supplier of taxable service should contain requisite details, and refund claim cannot be allowed on the basis of not having complete details as required verification cannot be carried out by the department on the basis of incomplete invoices. As in this case, the invoices issued by the Customs House Agencies does not have proper classification and does not have details of actual service providers in whose name the actual service providers issued the invoices. Therefore, the refund claim is not admissible.

Reasoning of judgment:- On careful consideration of submissions made by both sides, they find that the issue is whether supplier of services registered under CHA services, if issues invoices of reimbursable expenses such as Port Charges, Landing & Container charges, dock fees, examination charges, TMC, etc then service tax charged on this services would be eligible for refund if these services have been used in manufacturing of goods to be exported.
Accordingly, based on C.B.E. & C.’s Circular No. 106/9/2008-S.T., dated 11-12-2008 which clarifies that “The invoices/challans/bills issued by supplier of taxable service, in conformity with Rule 4A of the Service Tax Rules, 1994, are reasonable evidence that the services on which refund is being sought are taxable service. The compliance of condition that exporter has actually paid the Service Tax rests with the exporter claiming refund. Therefore, in so far as this condition is concerned, the refund claim should be processed based on furnishing of appropriate invoices/bills/challan by the person claiming refund and undertaking to the effect of payment of Service Tax by him. For the purposes of compliance verification, random checks should be carried out independently and where the refund amount is significant, post-refund audit may also be carried out”.
With regards to incomplete invoices/bills, etc., Rule 4A of the Service Tax Rules, 1994 prescribes the statutory requirement. Compliance of this rule requires that the invoices/challan/bills should be complete in all respect. Therefore, the exporter claiming refund of Service Tax under Notification No. 41/2007-S.T. should ensure in their own interest that invoices/bills/challan should contain requisite details (name, address and registration No. of service provider, S. No. and date of invoice, name and address of service receiver, description, classification and value of taxable service and the Service Tax payable thereon). Refund claim cannot be allowed on the basis of invoices not having complete details as required verification cannot be carried out by the department on the basis of incomplete invoices.
Therefore, the only requirement is that the exporter actually made the payment of service tax and services have been received by the exporter which is to be mentioned in the invoices issued by the service provider. It is immaterial that service provider is registered in some other category and he has provided some other services.
Base on the above case cited and the circular clarification that clearly represents that appellant is entitled for the refund claim and therefore the impugned order is set aside an appeal is allowed with consequential relief.

Decision: -Appeal is allowed

Comment:- the crux of the case is that it is not material from appellant point of view that whether supplier of services has taken the registration of all the services for which invoice being issued by the supplier and if the service tax paid by service receiver, then in such case receiver is entitle to claim credit or refund, as applicable. Accordingly, by taking into consideration the clarification of circular and the above case cited which involves the similar issue, the case went in favour of appellant and the appellant is allowed to claim refund of service tax paid on input services in manufacturing of goods to be exported.

Prepared by: - Manish Satyani

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PJ/CASE LAW/2015-16/2985

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