Whether non authorisation by port be a ground for rejecting refund claim even after amendment in definition of port services?

PJ/Case Laws/2012-13/1356

Case:- COMMR. OF C. EX., AHMEDABAD VersusHEMLINES TEXTILE EXPORTS PVT. LTD

Citation:-2012 (279) E.L.T. 425 (Tri. - Ahmd.)

Brief facts:-The respondent M/s. Hemlines Textile Exports Pvt. Limited, a manufacturer of made-up articles under Chapter 63, filed two claims for refund of service tax paid on taxable services utilised for export of goods, in terms of Notification No. 41/2007-S.T., dated 6-10-2007. The claims were partly rejected vide OIO dated 30-10-2009 and dated 29-1-2010. The details are as under :-

Period for which refund claimed	Amount of refund claimed (Rs.)	Taxable Services involved	OIO dated
October to December, 2008	2967/- 3589/-	CHA Service Port Service	dated 30-10-2009
January to March, 2009	8156/- 9023/-	CHA Service and Port Service	dated 29-1-2010

The respondents filed appeal against the orders rejecting the refund of tax on Port services. The Commissioner (Appeals) held that with enactment of Finance Act, 2010 on 8-5-2010, the definition of Port service has been amended and now no authorization from the airport/Port authority would be required for taxing these services. Quoting the DO letter No. F. No. 334/1/2010-TRU, dated 26-2-2010, the Commissioner (Appeals) held that the amendment has clarified the coverage of these services and there is no change in the scope of the definition. Hence, the Commissioner (Appeals) allowed the refund. Aggrieved by the order, Revenue is in appeal.

Appellant contentions: The appellantsubmits that according to definition of Port service given in Section 65(82) of the Finance Act, 1994, any service rendered by Port or other Ports, any person authorized by such port or other port in any manner in relation to vessels or goods. Therefore, unless the service provider was authorized by the port, the service cannot be considered as port service. The reliance of the Commissioner on the amended definition and the clarification issued by the Board is not correct.

Respondent contentions:- In the written submissions the respondent submitted that in the Notification No. 41/2007-S.T. there is no condition that service tax paid on port services cannot be refunded on the ground that authorization of port is not furnished. It is also submitted that amendment is clarificatory in nature.

Reasoning of Judgment:-Tribunal has found that services have been provided by the agent M/s. DHL Lemuir Logistics Pvt. Limited who in turn has been provided the service from the Port or persons authorized by the Port; that this is permissible in terms of Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006. Basically, the submission is that the service was not really provided by the persons who issued the receipts but they received the service on behalf of the respondents. In view of the clear observation that service has been provided by the service providers authorized by the Port, impugned order has to be sustained. In any case, rejection of refund claimed by the respondents would amount to reassessment of the service at the receiver’s end. What is required to be seen for sanctioning of refund is, whether service tax has been paid or not; whether service has been used or not and whether service falls in the services covered by the notification or not. Once these three aspects are satisfied, the officer sanctioning the refund cannot go into other issues to reject refund claimed.

Decision:-Appeal Rejected.

Comment:- The analogy drawn from this case is that refund claim to exporters should not be withhold on unnecessary grounds such as non authorisation by port when the definition of port services has been amended and moreover, service tax has been paid and the said service has been used for the purpose of exporting goods and is covered by the notification granting refund.

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PJ/Case Laws/2012-13/1356

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