Whether there is any time limit for refund of service tax on export of service?

PJ/CASE LAW/2015-16/2731

Case:- COMMR. OF C. EX., MUMBAI-II VERSUSHINCON TECHNOCONSULT LTD.

Citation:-2015 (37) S.T.R. 956 (Tri. - Mumbai)

Brief facts:- This appeal by Revenue is against Order-in-Appeal No. MI/AV/132/2011, dated 10-3-2011 passed by the Commissioner of Central Excise (Appeals)-IV, Mumbai-I.
The brief facts are that the respondent-assessee (M/s. Hincon Technoconsult Ltd.) is registered with Service Tax Department and had exported its services during the period June, 2005 to March, 2006. Pursuant to raising of the invoices and or realization of the payments from the consumer of the services, rendered outside India, the respondent deposited Service Tax and thereafter applied for refund on 20-3-2007 for an amount of Rs. 1,31,538/- under the provisions of Rule 4 read with Rule 5 of the Export of Services Rules, 2005 read with Notification No. 11/2005-S.T., dated 19-4-2005. The claim of refund was rejected mainly on the ground that it is time barred in terms of Section 11B of the Central Excise Act which applies to refund of Service Tax also under Section 83 of the Finance Act, 1994. It was also observed in the adjudication order that from perusal of the balance-sheet and profit and loss account, it is revealed that the Service Tax paid by the assessee, refund of which has been claimed, has not been shown as ‘receivable from the Govt.’. Accordingly, it was found that the claim is also hit by the doctrine of unjust enrichment.
Being aggrieved the appellant preferred appeal before the Commissioner (Appeals), who was pleased to allow the appeal with consequential relief holding that neither the claim is time barred nor the doctrine of unjust enrichment is attracted, and observed as follows : -
“7. The adjudicating authority does not dispute that the services had actually been rendered by the appellants as he himself states that fabrication drawing squarely fell under the definition of taxable services. He also does not dispute that the services were rendered to their clients outside India except in cases of Central Warehousing Corporation which services were rendered to SEZ, Mundra. The appellants have also produced inward remittance details in token of evidence that the remittance were received in convertible foreign exchange. I have also seen the invoices which have been produced by the appellants along with the paper book. Each of the invoices specifically lists out the total charges and the Service Tax paid thereon separately. There is no doubt therefore that export of services has taken place. The adjudicating authority does not dispute that such export of services are entitled to refund of the Service Tax paid thereon in terms of Notification No. 11/2005, dated 19-4-2005. Merely because the appellants have not filed refund claim in the prescribed proforma cannot disqualify them from the rightful refund which is due to them. If at all the adjudicating authority desired the submission of the claim in prescribed proforma all he had to do was to get a revised refund claim from the appellants. Not having done so it was the duty of the adjudicating authority to verify the claim on the basis of the documents produced by the appellants. As long as the conditions laid down in Notification No, 11/2005 i.e. (i) that the taxable services had been exported and payment had been received in convertible foreign exchange (ii) that the Service Tax for which rebate has been claimed has been paid is satisfied, the procedural aspects can either be rectified or condoned.
In so far as the application of limitation of one year prescribed under Section 11B is concerned, since the rebate is required to be sanctioned in terms of the conditions prescribed under Notification No. 11/2005, dated 19-4-2005 the question of applicability of time limit prescribed under Section 11B does not arise. Notification No. 11/2005-S.T., dated 19-4-2005 itself does not prescribe any time limit for the submission of the rebate claim. Further the doctrine of unjust enrichment does not apply either under Notification No. 11/2005 or even under Section 11B wherein exports are excluded from the purview of doctrine of unjust enrichment. The findings of the adjudicating authority therefore cannot be sustained.”
Being aggrieved, the Revenue have filed the present appeal before this Tribunal on the ground that by virtue of Section 83 of the Finance Act, 1994, the provisions of Section 11B of the Central Excise Act are applicable to Service Tax which provides for filing of refund claim within one year from the relevant date. Further, by virtue of explanation to Section 11B, refund includes rebate. It is further urged that the provisions of Section 11B override the provisions of Notification No. 11/2005-S.T. and reliance was placed on the ruling of this Tribunal in the case of Precision Controls v. Commissioner of Central Excise, Chennai - 2004 (176)E.L.T.147 (Tri-Chennai), where in case of rebate claim under Rule 12 of Central Excise Rules, 1944 Commissioner has no power to condone any delay in filing rebate claim.

Appellant’s contention:-The Revenue have filed the present appeal before this Tribunal on the ground that by virtue of Section 83 of the Finance Act, 1994, the provisions of Section 11B of the Central Excise Act are applicable to Service Tax which provides for filing of refund claim within one year from the relevant date. Further, by virtue of explanation to Section 11B, refund includes rebate. It is further urged that the provisions of Section 11B override the provisions of Notification No. 11/2005-S.T. and reliance was placed on the ruling of this Tribunal in the case of Precision Controls v. Commissioner of Central Excise, Chennai - 2004 (176)E.L.T.147 (Tri-Chennai), where in case of rebate claim under Rule 12 of Central Excise Rules, 1944 Commissioner has no power to condone any delay in filing rebate claim.

Respondent’s contention:- The learned Counsel for the respondent assessee argued that export of service is not chargeable to Service Tax. Further, Rule 4 of the Export of Services Rules give option to the assessee to export the service without payment of tax, whereas Rule 5 provides for rebate where tax has been paid relating to export of service. Thus, once the service is not taxable, the amount deposited by the appellant is not tax but in the nature of deposit and as such for refund of deposit, limitation as per Section 11B does not attract. Accordingly, he prays for upholding the impugned appellate order.

Reasoning of judgment:-Having considered the rival contentions, they find that Rule 4 of the Export of Services Rules provides for export of service without payment of tax as export of service is not exigible to tax. Further, Rule 5 provides for mechanism for rebate in case the tax has been paid mistakenly or by way of abundant caution. Thus, the amount of tax deposited by the assessee herein is not tax but in the nature of deposit. The same not being tax, there is no time limit for refund of deposit as Section 11B applies to refund of duty/tax only. Further, they find that the ruling in the case of Precision Controls (supra) relied upon by the Revenue relates to export of goods and refund under the Central Excise Rules, 1944 and the same is not applicable in the facts of the present case. Thus, the appeal of the Revenue is dismissed. Cross-objection also stands disposed of. The respondent assessee will be entitled to consequential relief, if any, in accordance with law.

Decision:-Appeal allowed.

Comment:- The analogy of the case is that Export of services not eligible to tax under Rule 4 of Export of Services Rules, 2005 whereas Rule 5 ibid provides for rebate where tax paid mistakenly or by way of abundant caution. Therefore, the amount paid as tax by appellant in nature of deposit and Section 11B is applicable to duty/tax only. Hence, limitation to file refund claim as per time specified under section 11B is not applicable to refund of service tax paid on export of service.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2731

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