Whether refund can be rejected on the basis of clerical errors when all the conditions of refund was fulfilled?

PJ/CASE LAW/2015-16/3018

Case: COMMR. OF C. EX. & S.T., RAIPUR Vs SATYAM BALAJI RICE INDUSTRIES (P) LTD.

Citation:2015 (39) S.T.R. 1004 (Tri. - Del.)

Brief Facts:This appeal is preferred by Revenue on the singular ground that the respondent/assessee’s claim, for refund of service tax remitted to the extent of Rs. 19,62,030/-, is not in strict technical compliance with the requirements stipulated in Notification No. 41/2007-S.T. as amended by the Notification No. 17/2009-S.T., dated 6-10-2007 and 7-7-2009, respectively.
The respondent/assessee filed a claim for refund of Rs. 44,03,972/-, by a letter dated 5-10-2012, in terms of Notification No. 41/2012-S.T., dated 29-6-2012, claiming to have paid service tax on taxable services received which were utilized for export of rice and broken rice. The Assistant Commissioner of Service Tax, Raipur, vide the order dated 9-11-2012 and for the detailed reasons recorded therein, sanctioned refund as claimed.
Revenue preferred an appeal which was rejected by the impugned order dated 25-10-2013, passed by the Commissioner (Appeals-I), Raipur. Revenue’s appeal before the lower appellate authority was confined to three components of the refund granted by the primary authority, amounting to Rs. 19,62,030/- i.e. a refund on port service and storage & warehousing service, claimed on the basis of Bills furnished by M/s. Ramgopal Shipping Services, Kakinada. The Revenue claimed in its appeal that refund is not eligible to be sanctioned since the documents did not set out the service tax registration number; the nature of the taxable service rendered by the service provider i.e. Ramgopal Shipping Services; since the appellant failed to comply with the requirements of Rule 4A of the Service Tax Rules, 1994 and for the reason that refund was not admissible in terms of Notification No. 17/2009-S.T., dated 7-7-2009.

Reasoning of Judgement:The appellate Commissioner, for rejecting Revenue’s appeal recorded the following detailed reasons in para 8 of the impugned order :
“I find that department had filed the instant appeal for rejection of refund claim of Rs. 19,62,030/- on the ground that Bills issued by service provider i.e. M/s. Ramgopal Shipping Services Kakinada do not contain service tax registration number and nature of taxable service rendered by them. The respondent in their defence has contended that M/s. Ramgopal Shipping Services Kakinada are mentioning the Registration No. by affixing stamp on the bills. However, due to some clerical mistake they could not affix such stamp on some bills issued by them in their favour. They have also produced sample copies of some Bills having stamp of Registration No. affixed by the service provide thereon. In this regard I have perused the Bill No. 47/2011-12, dated 7-1-2012 and 49/2011-12, dated 7-1-2012 issued by M/s. Ramgopal Shipping Services Kakinada to the respondent and found that Registration No. of the said service provider is AANFR7149ASD001 which has been mentioned by affixing stamp on the body of the Bills and nature of taxable service rendered by them to the respondent has also been clearly mentioned on the body of the said Bills. I find that it is a undisputed fact that service provider is registered with department and has also discharged their service tax liability on the service rendered to the respondent and nature of taxable service rendered by them for which the said refund claim was filed by the respondent have also been specified in Notification No. 17/2009-S.T., dated 7-7-2009, 52/2011-S.T., dated 30-12-2011 and 41/2012, dated 29-6-2012. There is also no dispute regarding the export of goods. As per records such as Shipping Bills and Bill of Lading submitted by the Exporter i.e. respondent, it is evident that goods has been exported. I find that when all the conditions for claiming refund of service tax paid by the service provider and recovered from the respondent have been fulfilled, there is no justification to reject the refund claim to the extent of Rs. 19,62,030/- merely on the basis of the technical error. Such rejection depriving of substantial benefit to the respondent is not sustainable in law especially when the Revenue has not disputed the nature of specified service rendered to the respondent, service tax payment and utilisation of such service for export of rice and proof of export thereof. Further the department is still at liberty to verify the above facts from the jurisdictional service tax authority of service provider.”
From the aforesaid it is clear that the appellate Commissioner was satisfied that all conditions for claiming refund of service tax were fulfilled, except that on account of a clerical error, the assessee/claimant failed to affix stamp on some of the bills. Revenue in the present appeal does not dispute the findings of fact recorded by the appellate Commissioner in support of the conclusion that the assessee established its claim for grant of refund of the service tax incurred on receipt of taxable services which were used for export of rice and broken rice, which was the condition for granting refund under Notification No. 17/2009-S.T. and 41/2009-S.T. Revenue’s present appeal reiterates the self same grounds as had found disfavour with the primary and the lower appellate authority.
The appeal is thus misconceived and is dismissed as such. No costs.

Decision: Appeal Dismissed

Comment:In this case, the exporter has claimed the refund on services used for export of goods. Department has filed appeal and claimed that refund is not eligible to be sanctioned since the documents did not set out the service tax registration number; the nature of the taxable service rendered by the service provider i.e. Ramgopal Shipping Services.
Tribunal held that all conditions for claiming refund of service tax were fulfilled, except that on account of a clerical error, the assessee/claimant failed to affix stamp on some of the bills. Therefore refund can’t be rejected on the basis clerical errors. Therefore Revenue appeal has been dismissed.

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PJ/CASE LAW/2015-16/3018

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