Limitation period prescribed by a notification has prospective effect.

PJ/Case Law/2014-15/2139

Case:-M/s ADDI INDUSTRIES LTD Vs THE COMMISSIONER OF CUSTOMS & CENTRAL EXCISE

Citation:- 2014-TIOL-530-HC-ALL-ST

Brief facts:- The assessee filed a refund claim in the amount of Rs.6,33,923/- on 10 December 2009 under Section 83 of the Finance Act, 1994 (read with Section 11B of the Central Excise Act 1944). The assessee claimed that it had paid service tax by mistake during the period from April 2008 to June 2009 in respect of the services of commission agents located abroad who had been engaged for procuring orders for export. A notice to show-cause was issued to the assessee by the Assistant Commissioner, Customs, Central Excise & Service Tax, Division-I, Noida on 8 January 2010 to show-cause as to why the refund should not be disallowed. The Assistant Commissioner rejected the refund claim by an order dated 7 March 2011. In appeal, the Commissioner (Appeals) held that the claim for refund filed within a period of one year from the date of export was not barred by limitation and the assessee would be entitled to a refund for that period, if otherwise admissible on merits. The appeal filed by the assessee has been dismissed by the Tribunal by its impugned order dated 23 September 2013. In order to appreciate the controversy, brief reference to the relevant notifications would be necessary:

(i) On 6 October 2007 notification 41/2007 was issued under Section 93(1) of the Finance Act, 1994 by which an exemption was granted in respect of certain taxable services from the whole of the service tax leviable thereon subject to conditions. Clause 2(b) of the circular contemplates that exporters shall claim the exemption by filing a claim for refund of service tax paid on specified services. Clause 2(e) of the circular provides that the claim for refund shall be filed on a quarterly basis, within sixty days from the end of the relevant quarter during which the said goods have been exported.

(ii) On 1 April 2008 notification 17/2008 was issued by the Union Ministry of Finance to amend the earlier notification dated 6 October 2007. By the amendment, taxable services under Section 65(105)(zzb) comprising of services provided by a commission agent located outside India, and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter for the sale of goods exported by him were specified. Consequently, the exemption in respect of services availed of by an exporter of a commission agent located abroad for acting on behalf of exporter for the sale of goods was brought into effect.

(iii) On 7 July 2009, by notification No.17/2009, the earlier notification (Notification 41/2007) was superseded. An exemption was provided by way of refund of service tax paid on specified services used for the export of goods. Clause 2(f) of the notification provided that the claim for refund shall be filed within one year from the date of export of the goods. The explanation stipulated that the date of export shall be the date on which the proper officer of Customs makes an order permitting clearance and loading of the goods for exportation. Admittedly, the services of a commission agent, governed by Section 65(105)(zzb) would not fall within the purview of notification 17/2009.

(iv) By notification 18/2009, which was also issued on 7 July 2009, various taxable services including those governed by Section 65(105)(zzb) came to be exempted subject inter alia to the condition that the exporter availing of the exemption shall file a return every six months in a financial year within fifteen days of the completion of the six months. Hence, by notification 18/2009 the requirement of paying the service tax and thereafter applying for a refund was deleted in respect of the taxable services governed by that circular.

Appellant’s contentions:- The contention of the assessee is that once the goods have been exempted by Notification 18/2009 on 7 July 2009, there was no requirement of paying service tax and then applying for a refund and hence, the application which was filed by the assessee ought to have been entertained in that event. It has been submitted, relying on the provisions of Section 11B of the Central Excise Act, 1944 (read with Section 83 of the Finance Act, 1944) and Clause (f) of Explanation-B that the refund application could have been made within one year of the date of payment of duty. Since the duty was paid on 31 August 2009, it has been contended that the application was within limitation.

Respondent’s contentions:- The period during which the goods were exported by the assessee was April 2008 to June 2009. At the relevant time the notification which held the field was notification 41/2007 as amended by notification 17/2008. Accordingly, the assessee was required to pay service tax and thereafter apply for refund within a period of sixty days from the end of the relevant quarter during which the goods had been exported. Admittedly, the assessee did not do so. In so far as the services governed by Section 65(105)(zzb) are concerned, the requirement of paying service tax and then applying for a refund was done away with by notification 18/2009 prospectively. The assessee paid service tax on 31 August 2009 and submitted a refund claim on 3 November 2009/10 December 2009. The notice to show-cause indicates that by the assessee's letter dated 10 December 2009, refund was sought under Section 83 of the Finance Act, 1994 (read with Section 11B of the Central Excise Act, 1944). Under Section 11B a claim for refund is required to be filed within one year from the relevant date. The assessee claimed an exemption in terms of the relevant notification which was issued in exercise of powers conferred by Section 93(1) of the Finance Act, 1994. Consequently, as an assessee claiming an exemption, the appellant was also bound by the condition which was stipulated in the exemption notification. Under the notification dated 6 October 2007 (as amended on 1 April 2008), the claim for refund was required to be filed on a quarterly basis within sixty days from the end of the relevant quarter during which the goods had been exported.

Reasoning of judgment:- The Commissioner (Appeals), proceeded to grant to the assessee the benefit of the subsequent notification (Notification 17/2009) under which it is provided that the claim for refund shall be filed within one year from the date of export. This limitation, however, would govern those taxable services which were governed by the notification and there is no dispute that services falling under Section 65(105)(zzb) were not covered by notification 17/2009. Nonetheless, since the Commissioner (Appeals) granted the benefit of the aforesaid period of one year and the revenue did not challenge the order of the Commissioner (Appeals), the Tribunal has correctly not interfered with that finding. The entire argument presupposes that Notification 18/2009 would apply in respect of the taxable services in relation to the exports for the period April 2008 to June 2009. Notification 18/2009 is prospective. Thereafter, the only requirement is that a return should be filed in respect of the exempted taxable service. In respect of the taxable services which were rendered in respect of the export of goods prior to the date of Notification 18/2009, that notification would have no application whatsoever. The assessee had made exports between April 2008 to June 2009. Under the relevant notification, service tax was liable to be paid and then an application for refund was required to be presented within 60 days of the end of the relevant quarter in which the goods had been exported. Once a period of limitation was prescribed in the exemption notification for submitting the refund application, that would necessarily govern. There being no appeal by the revenue against the order of the Commissioner (Appeals), the Tribunal did not disturb the finding of the Commissioner (Appeals). Hence, the Tribunal has in our view, appropriately not interfered with the finding of the Commissioner (Appeals) that the assessee was entitled to refund to the extent of one year from the date of export.

In this view of the matter, the appeal will not give rise to any substantial question of law and shall, accordingly, stand dismissed.

Decision:-The appeal is dismissed.

Comment:- The crux of the case is that once a period of limitation is prescribed the same would necessarily govern. As the period under consideration was from April 2008 to June 2009 and at the relevant time, the notification 41/2007-ST required assessee to pay service tax and thereafter apply for refund within a period of sixty days from the end of the relevant quarter, the provisions of the said notification would apply. As the assessee did not comply with the above notification, they cannot be given the benefit of notification no. 18/2009 that extended the time limit to file the refund claim because the notification was to be applied prospectively.

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PJ/Case Law/2014-15/2139

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