Custom, Excise & Service Tax Tribunal
M/S Srf Ltd vs C.C.E., Jaipur-I on 11 September, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
Division Bench
Appeal No. ST/829 to 831/2009-Cus(BR)
(Arising out of Order-in-Appeal No. 70 to 72 (DK) ST/JPR-I/2009 dated 05/08/2009 passed by Commissioner (Appeals), Customs and Central Excise, Jaipur)
Date of Hearing: 06/08/2015
Date of Pronouncement:11/09/2015
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
M/s SRF Ltd. Appellant
Vs.
C.C.E., Jaipur-I Respondent
Appearance:
Present for the Appellant: Shri Narendra Singvi, Advocate
Present for the Respondent: Smt. Suchitra Sharma, Commissioner (AR)
Coram: Honble Mr. R.K. Singh, Member (Technical)
Honble Ms. Sulekha Beevi C.S., Member (Judicial)
Final Order No. 52866-52868/2015
Per: Sulekha Beevi C.S.
1. The appellants are aggrieved by rejection of refund claim on the ground that the documents issued in respect of services relating to activities at the port of export have not been issued by the port or any person authorized by the port and that the documents being debit notes, refund is not admissible. The issue in all the above appeals being the same, they were heard together and are disposed by this common order.
2. The brief facts of the case are as under:
2.1 The appellant filed refund claims for the periods January 2008 to March 2008, April 2008 to June 2008, and July 2008 to September 2008 under Notification No. 41/2007-ST dated 06.10.2007 (hereafter referred to as Notification No. 41/2007). The refund claim was in respect of services such as Terminal Handling Charges, Bill of Lading charges etc, availed for export of goods. After adjudication the refund claim was rejected vide order dated 31/10/2008 on two grounds;
a) that appellant failed to produce documentary evidence to show that such services are provided by port or persons authorized by port and
b) that debit notes issued by service providers are not proper documents in terms of rule 4A of Service Tax Rules, 1994. In appeal, this view was upheld by the Commissioner (Appeals) who dismissed the appeal. Aggrieved, the appellant is before the Tribunal.
3. The case of the appellant is that the impugned services are covered under the scope of Notification No. 41/2007 for the purposes of exemption by way of refund. As per the notification taxable services specified in Column (3) of the Schedule are exempted from payment of tax subject to fulfillment of conditions stated in corresponding entry in Column (4) of the Schedule, provided they are received and used by the exporter for export of goods. The specified services stated in Serial No.2 of the notification refer to services used for export of goods. There is no condition attached to these services in Column (4). It is the contention of the counsel that the authorities below have rejected the claim giving a go by to the plain and literal interpretation of the notification. The relevant notification for the purposes of the appellants case being notification No. 41/2007, the impugned services need not answer the description of specific sub clause of Section 65 (105). Further as per Boards Circular No. 112/6/2009-ST dated 12/03/2009 the Board has clarified that regardless of classification of service by the service provider, the refund must be granted if it is otherwise in order.
4. Against this, the Ld. DR reiterated the findings in the impugned order and contented that refund claim of service tax paid on services like Terminal Handling Charges, Bill of Lading fee, Sundry incident & Miscellaneous Port expenses is not admissible. Specified services in Serial No.2 of the Notification No. 41/2007 refers to services classified under Section 65(105)(zn). During the relevant period, services provided by a port or any person authorized by a port only would fall into this category. The appellants failed to produce documentary evidence that the impugned services were provided by port or any person authorized by port. It is mandatory on the part of the appellant to produce evidence that the refund of service tax claimed by them has been actually paid by the service providers under the category of port service. That it is the burden of the person who claims benefit of notification to produce evidence that they fulfill the conditions of the notification. Therefore the onus is on the appellant to produce documentary evidence that the service tax on Terminal Handling Charges, Bill of Lading Fee, Sundry Incidental & Miscellaneous Port Expenses has been actually paid under the head port service. Commissioner (Appeals) has observed that the service provider of these services has paid service tax under Business Auxiliary services. Though the services may be availed by the appellant in connection with port services, the service provider has classified them as BAS and paid tax under this category which makes the refund inadmissible under the notification. Further appellant had claimed the refund of service tax paid on the strength of debit notes. These are not proper documents in terms of Rule 4A of Service Tax Rules, 1994 and that therefore refund claim has been rightly rejected.
4. The issue to be analyzed is whether appellants are eligible for refund on the basis of notification No. 41/2007. The relevant portion of the schedule of the said notification is reproduced as under:
Sl.No
Taxable Services
Conditions
Classification under Finance Act, 1994
Description
(1)
(2)
(3)
(4)
1.
Section 65 (105)(d)
Services provided to an exporter by an insurer, including a re-insurer carrying on general insurance business in relation to insurance of said goods
(i) document issued by the insurer including re-insurer, for payment of insurance premium shall be specific to export goods and shall be in the name of the exporter.
2.
Section 65(105)(zn)
Services provided for export of said goods
-
At this juncture, it would also be relevant to notice the subsequent notification No. 17/2009 ST dated 07/07/2009 which is as below:
Sl.No. Classification of sub-clauses of clause (105) of section 65 of the said Act Taxable Services Conditions (1) (2) (3) (4)
2. (zn) Service provided by a port of any person authorized by the port in respect of the export of said goods.
The definition of port services contained in section 65 (105) (zn) of the Finance Act, 1994 as it stood during the relevant period is as under;
(zn) to any person, by a port or any person authorized by the port, in relation to port services, in any manner; The amendment brought forth to the definition by the Finance Act, 2010 w.e.f 01.07.2010 is noticed as under;
(zn) to any person, by any other person, in relation to port services in a port, in any manner:
Provided that the provisions of section 65A shall not apply to any service when the same is rendered wholly within the port;]
5. It is not in dispute that the services involved are connected with the export of goods. So also the fact that appellant has paid service tax to the service provider is also not disputed. According to appellants, the services of terminal handling charges, bill of lading charges etc, were port services availed by the appellant for export of goods. Though in notification No. 41/2007 corresponding to serial No. 2 , the classification of the specified service in column (2) is shown as section 65 (105) (zn) which is the classification of port services, the description of the specified service given in column (3) is shown simply as services provided for export of said goods. The whole confusion lies in this description given in column (3). The description of port service given in the notification no.41/2007 is different from the description of port services defined in section 65 (105) (zn). This is clear from the subsequent notification no.17/2009 dated 07.07.2009 which is also reproduced above. But the argument of the counsel that by imposing condition that the appellants should produce documents to establish that services were provided by port or persons authorized by port, the respondents are trying to press into application the condition contained in the subsequent notification No.17/2009 does not find favour with us. The appellant is correct in submitting that there are no conditions attached to services specified in serial No. 2 of the notification No. 41/2007. However, as column (2) specifies the service as section 65 (105) (zn), only if the services fit into the classification of section 65 (105) (zn) can they be called as Port Services. If the argument of the counsel that the services need not answer the description of sub-clause (zn) of section 65(105) is to be accepted then the description of all other services given in column (2) would be redundant. Such an interpretation is not permissible.
6. The objection raised by Revenue is that only if the service provider pays the service tax in respect of services rendered to the appellant under the head port services coming under section 65 (105) (zn), the refund can be allowed. In the present case the service provider has paid the tax under BAS. The Revenue lays thrust on clause (c) of para 1 of notification No. 41/2007 wherein it is seen stated that in order to claim refund, the exporter claiming the exemption has actually paid the service tax on the specified services. According to Revenue this means that refund is admissible only if the documents evidence payment of service tax for specified service i.e, for port services. That the appellant therefore has to establish that the services for which refund is claimed was provided by a port or a person authorized by the port as contained in the definition of section 65 (105) (zn).
7. The Ld. Counsel for appellant has countered these submissions by adverting to the clarification issued by CBEC, vide Circular No. 112/6/2009 ST, dated 12/03/2009.
The same is reproduced as under:
S.No. Issue Raised Clarification VII The Service provider providing services to the exporter provides various services. But he has registration of only one service. The refund is being denied on the grounds that the taxable services that are not covered under the registration are not eligible for such refunds.
Notification No. 41/2007-S.T. provides exemption by way of refund from specified taxable services used for export of goods. Granting refund to exporters, on taxable services that he receives and uses for export do not require verification of registration certificate of the supplier of service. Therefore, refund should be granted in such cases, if otherwise in order. The procedural violations by the service provider need to be dealt separately, independent of the process of refund.
The above clarification issued by the Board throws light to the existence of problems regarding the service provider classifying or paying tax under a particular category of service which may not be covered under the subclasses specified in 41/2007 as is the situation in the present case. The Ld. Counsel for appellant has also placed before us Circular: 334/1/2010 TRU dated 26/02/2010. In Annexure C of this clarification regarding the amendment sought to be brought forth to the definition of port services and airport services is given as below:
Services provided in an airport or port 1.1 Two services, namely port services and the airport services were introduced in Budgets 2001 and 2004 respectively. The services provided by minor ports covered under other ports became taxable from 2003. The purpose behind creating these services was that since a number of activities are undertaken within the premises of ports and airports, it would be easier to consolidate all such services under one head.
1.2 It was reported that divergent practices are being followed regarding classification of services being performed within port/airport area. In some places, all services performed in these areas [even those falling within the definition of other taxable services] are being classified under the port/airport services. Elsewhere, individual services are classified according to their individual description on the grounds that the previsions Section 65A of Finance Act, 1994 prescribed adoption of a specific description over a general one.
1.3 Further, both the definitions used he phrase any person authorized by port/airport. In many ports/airports there is no procedure of specifically authorizing a service provider to undertake a particular activity. While there may be restriction on entry into such areas and the authorities often issue entry-passes or identity cards, airport/port authorities seldom issue authority/permission letters to a service provider authorizing him to undertake a particular task. Many taxpayers have claimed waiver of tax under these services on the ground that the port/airport authority has not specifically authorized them to provide a particular service.
1.4 In order to remove these difficulties, the definitions of the relevant taxable services are being amended to clarify that all services provided entirely within the port/airport premises would fall under these services. Further, specific authorization from the port/airport authority would now not be a pre-condition for the levy.
8. The above clarification throws light on difficulties faced by exporters to produce documents in accordance with Section 65(105) (zn) as there is no procedure of issuing permission letters or authorization to such service providers. The Board in its circular dated 12/03/2009 has clarified that granting refund does not require the verification of registration of service provider and refund can be granted if otherwise in order. The implication of these two clarifications read together, along with the amendment brought forth in the definition of port services, in our view, is that the exporter should not be unduly burdened with a condition to establish that the service provider was registered under port services. The learned counsel for appellant has placed reliance on the judgment in Commissioner vs Adani Enterprises Ltd. 2014(34) STR 741 (Guj) wherein the Honble High Court has considered the very same issue and held in favor of the assessee. The said decision squarely covers the issue in the present case the facts being similar. Revenue placed reliance on the decision rendered by CESTAT in Rajasthan Textile Mills Vs Commissioner of Central Excise, Jaipur reported in 2015 (37) STR 410 (Tri-del). The refund claim therein was denied as the appellants had availed drawback also in respect of goods exported by them. Facts being different the said case is distinguishable from the case in hand.
9. What remains to consider is the issue whether debit notes are proper documents upon which refund can be claimed. The documents reveal that they contain all the details as required under Rule 4A of the Service Tax Rules, 1994. The purpose sought to be served by specifying the details that are to be contained in the document issued while rendering service is to provide information regarding the registration number and details of service provider details, details of service recipient, description and value of taxable service, and the service tax payable thereon. If the documents provide these necessary particulars, merely because the documents are debit notes the refund cannot be denied at the end of the service recipient.
10. From the above discussion, we are of the view that the rejection of refund is unjustified. The appeals are allowed with consequential reliefs if any.
(Pronounced on 11/09/2015) (R.K. SINGH) MEMBER (TECHNICAL) (Sulekha Beevi C.S.) Member (Judicial) K. Gupta ??
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