Whether refund of export of service can be rejected on the ground that the invoice was issued late ?

PJ/CASE LAW/2015-16/2872

Case:-BAIN CAPITAL ADVISORS INDIA PVT. LTD. VERSUSCOMMR. OF S.T., MUMBAI-I

Citation:- 2015 (39) S.T.R. 668 (Tri. - Mumbai)

Brief facts:- This appeal is directed against Order-in-Appeal No. PD/518/S.T.-I/2014, dated 16-4-2014 passed by the Commissioner of Central Excise (Appeals), Mumbai-IV.
The facts of the case in brief is that the appellants are registered with the Service Tax department under the category of “Banking and other Financial Servicers”. They filed refund claims under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 5/2006, dated 14-6-2006 and Notification No. 11/2005-S.T., dated 19-4-2005. The department while scrutinizing the said refund claims had allegedly found some discrepancies that were communicated to the appellant through show cause notice or deficiency memo etc. After hearing the appellant, the refund claims were disposed of. Refund claims for the period July, 2008 to March, 2010 (in all four) were totally rejected on merits. Refund claims for the period April, 2010 to March, 2011 (one) was partly sanctioned and partly rejected on merits. Refund claims for the period April, 2012 to June 2012 (one) was rejected on issue of law as well as on merits.
The appellant herein aggrieved by such order-in-original, preferred appeals before the first appellate authority. The first appellate authority, by the impugned order, rejected all the six appeals. As against all the six orders, the appellant preferred appeals before the Tribunal and five appeals were decided and disposed of by this Bench vide final order No. A/1665-1669/CSTB/CI, dated 16-10-2014. This appeal is the sixth appeal, for the period April 2012 to June 2012.

Appellant’s contention:-The learned Sr. Advocate, after taking them through the show cause notice, order-in-original and the impugned order, would submit that the refund claim has been rejected only on the ground that the appellant had filed the refund claim on 29-6-2012 whereas the invoices, which has been raised by the appellant is on 30-6-2012; also that the rebate claim filed by the appellant is bad in law; and the amount of service tax paid is not reflected in the ST-3 returns.
The learned counsel would submit that though the invoice is raised on 30-6-2012, the said invoice specifically indicates that the service tax, education cess, secondary and higher education cess is being indicated only for the purpose of paying it from the Cenvat credit balance and claiming it as refund/rebate under Notification 11/2005-S.T. He would take them through the said invoice as also the foreign inward remittance certificate issued by the bankers for the amounts being received. He would then draw their attention to the Cenvat credit register maintained by the appellant and submit that most of the service liability stands debited in the account on 29-6-2012. It is also his submission that the findings of the appellate as well as the adjudicating authorities are contrary to the factual position.

Respondent’s contention:-The learned Departmental Representative would submit that the amounts which have been indicated by the appellant as received in foreign exchange is not tallying with the amount which has been billed by the appellant for the services rendered. He would also draw their attention to the fact that the ST-3 returns do not indicate as to the gross amount having been received in advance and it is not clear that the appellant had received what amounts for the services rendered. He would also submit that the rebate claim has been filed by the appellant on 29-6-2012 whereas the invoice is of 30-6-2012; claim was raised even before the issue of invoice or providing services.

Reasoning of judgment:- They have considered the submissions made by both the sides at length and perused the records. In their considered view, the only question that arises for their deliberation is, whether during the period April, 2012 to June, 2012, the refund claim filed by the appellant is correct and whether they are eligible for such refund claim or not? On perusal of the records, they find that the invoice which has been raised by the appellant on 30-6-2012 clearly indicates that the said invoice is for the services rendered by them to an entity situated in Mauritius. It is undisputed that the said services are exported and the appellant is eligible for the refund of the amount of service tax paid by them by debiting the amount in Cenvat credit account. It is noticed by them that the appellant had debited the Cenvat credit register on 29-6-2012 indicating therein that the Cenvat credit is utilised for payment of service tax on services exported to Bain Capital Mauritius. In their considered view, when the facts are very clear and when there is export of services and the amounts have been debited in Cenvat credit register there was no reason for the lower authorities to reject such a valid rebate claim. The only reason given by the first appellate authority for rejecting this claim was that it was filed on 29-6-2012 whereas the invoice was raised on 30-6-2012 and cannot be correlated. Invoice can be raised on any date but the debit of the amount towards service tax liability was on the date when the rebate claims were filed. On a specific query from the Bench, as to the certificate of foreign inward remittance not tallying with the amounts indicated in the ST-3 returns, the learned counsel would submit that he would file the invoices and the correct reconciliation. It was filed by the appellant on 16-1-2015. On perusal of the said reconciliation and the documents like FIRCs and the invoices raised by the appellant, they find that the entire amount, which has been billed by the appellant to Bain Capital Mauritius, has been received by them through banking channel.
In the light of the factual position as brought by them hereinabove, they find that the rejection of the rebate claim of the amount debited by the appellant in Cenvat credit register for the export of services is incorrect. The order to that extent is liable to be set aside and the rebate claims filed by the appellant needs to be allowed. The impugned order to the extent it is challenged in this appeal is set aside and appeal is allowed with consequential relief, if any.

Decision:-Appeal allowed

Comment:- The analogy of the case is invoice can be raised on any date but debit of amount towards Service Tax liability was on date when rebate claims filed, the rebate claim should be sanctioned. On perusal of reconciliation and documents like FIRCs and invoices raised, there was no doubt as regards export of service and the entire amount billed was received through banking channel. Hence, the refund claim was allowed.

Prepared by :- Monika Tak

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PJ/CASE LAW/2015-16/2872

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