Refund of Service Tax under Notification No. 41/2007-ST

PJ/Case Laws/2011-12/1211

Case:-PARAMESWARI TEXTILES v/s COMMISSIONER OF C. EX., TIRUCHIRAPALLI

Citation:-2011(22) S.T.R. 625 (Tri.-Chennai)

Issue:- Whether the refund of the service tax on export of goods may be denied by the original authority merely on the ground that the assessee have not fulfilled the conditions of Notification No. 41/2004-S.T. and that the service provider’s invoices were not specific to the export goods?

Brief Facts: - Appellant filed for refund of service tax on services utilised in export of their goods under Notification No. 41/2007-ST, dated 6.10.2007. The lower Appellate Authority disallowed refund in respect of Service tax paid for Technical Testing & Analysis Service. Hence, the appellant is before the Tribunal.

Appellant’s Contention: - Appellant stated that the Lower Authority has denied refund for the said service by merely stating that appellant have not fulfilled the conditions as specified in Notification No. 41/2007-ST, dated 6.10.07 and also that the service providers invoices were not specific to the export goods. However the appellants had submitted the necessary details including IKEA specifications provided by the foreign buyer in Sweden and the export goods had to confirm to the Swedish standards without which the buyer would not have accepted the goods.

It was argued that they had furnished all the details to the Original Authority and he has examined these details before allowing the refund. The original authority also found on the verification of the invoices from the service provider that there was a general co-relation between the export goods and the invoice from the technical Testing & Invoices Service. As such, the Cryptic order of the lower authority denying the refund was not justified.

Respondent’s Contention: - Revenue fairly stated that if testing is as per the buyer’s requirement for the purpose of export, service tax paid in respect of such testing and analysis is required to be refunded.

Reasoning of judgement:- The Tribunal found that the findings of the Lower Appellate Authority were very cryptic. He has merely stated that the conditions of Notification are not fulfilled by the appellant and that service providers invoices were not specific to the export goods. It was found that the order of the Original Authority is fairly detailed and he has examined the documents submitted by the appellants before granting refund. It was held that the appellant have submitted a copy of the IKEA specification for textiles. It was not denied that the exports to Sweden should meet the standards and specifications provided by IKEA so that the export goods are accepted by the buyer in Sweden. In view of the fact that the appellants have got the test done according to the IKEA specifications, the original authority has correctly concluded that they have fulfilled condition no. (i) against S. No. 1 relating to Technical Testing & Analysis Service. Further they also found a broad co-relation between the invoice issued by the Testing & Analysis Service provider and the export goods. As it is the policy of the Government to encourage exports and not to burden the export consignments with domestic taxes, like the service tax which is paid in relation to the input service. Hence the refund should be allowable.

Decision:- Appeal allowed.

Comment:- This verdict has clearly held that the service is used in export then the refund is admissible. But the departmental authority is not accepting the position. We have wrote a series of articles namely “Johnny and service tax refund” to bring about the problems of exporter. But still the department is granting refund to exporters.

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PJ/Case Laws/2011-12/1211

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