Custom, Excise & Service Tax Tribunal
J.P. Morgan Services India Private Ltd vs Commissioner Of Central ... on 5 January, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No.ST/454/11-Mum (Arising out of Order-in-Appeal No. PK/R-3/2008 dated 12/1/2008 passed by Commissioner of Service Tax, Mumbai) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== J.P. Morgan Services India Private Ltd. Appellant Vs. Commissioner of Central Excise(Service Tax), Mumbai Respondent Appearance:
Shri Tarun Jain, Advocate, for Appellant Shri A.K. Goswami, Additional Commissioner (AR), for Respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing : 05/01/2016 Date of Decision : 05/01/2016 ORDER NO Per: M.V. Ravindran
This appeal is directed against Order-in-Appeal No. PK/R-3/2008 dated 12/1/2008.
2. The relevant facts that arise for consideration are appellant had filed a refund claim on 12.01.2006 under rule 5 of the Export of Service Rules, 2005 (herein after preferred to as rules) being tax paid on input services utilized for export services during the period September, 2004 to June 2005. The adjudicating authority after issuing the show cause notice, and after following due process of law, rejected the refund claim on the ground that they did not submit the relevant documents and the procedures as envisaged in notification 12/2005 dated 19.04.2005 are not applicable for export made prior to that date. Aggrieved by such an order, an appeal was preferred to the first appellate authority. The first appellate authority also concurred with the views of the lower authorities and concluded that for the period prior to 19.04.2005, notification no. 12/2005 will not apply and the refund claim for that period is accordingly rejected while for the period post 19.04.2005, he has remanded the matter back to the adjudicating authority to reconsider the issue after scrutinizing the documents. Aggrieved by such an order the appeal is before the Tribunal.
3. Learned Advocate draws our attention to the facts of the case, show cause notice issued and the orders passed by the lower authorities. It is his submission that the rejection of refund claim is incorrect and there is no dispute that they had exported the services and/or eligible to avail CENVAT credit on the input and input services. It is also his submission that there is no dispute as to the fact that input services and inputs are used for the exported services. He would submit that the judgment of the tribunal in the case of WNS Global Services P. Ltd. 2008 (10) STR 273 will be applicable, that it has been upheld by the Honble High Court of Bombay as reported as 2011 (22) STR 609 (Bom), he relied upon the said judgment for the ratio that benefit of export rebate should not be denied even if the same are exported prior to the rules those are brought into the statute.
4. Learned departmental representative on the other hand would draw our attention to the provisions of Export of Service Rules, 2005, he would submit that the said rules were brought into statute effective from 15-03-2005. He would submit that the refund claims for the rebate on tax paid on input services prior to 15.04.2005 are not governed by these Exports of Service Rules and need to be addressed independently and no refund claim has been filed by the appellant in time. He would submit that the provisions of notification 12/2005 which brought into statute, the Rule 5 of the Export of Service Rules, 2005 cannot be applied retrospectively.
5. We have considered the submissions made at length by both sides and perused the records.
6. The issue involved in this case is regarding the refund of the service tax paid on input services for the period September, 2004 to April, 2005. It is undisputed that the appellant had exported the services and are eligible to avail the CENVAT credit of service tax paid on input services. There only bone of contention between the appellant and the department is regarding the applicability of the Rule 5 of the said rules for the refund of the amount of CENVAT credit on the Exported Services prior to 15.04.2005.
6.1. On consideration of submissions made by both sides, we find that both the lower authorities have misdirected the findings regarding the non applicability of the Rules in this case.
6.2. The provisions of Export of Service Rules 2005 was brought into statute under notification no. 9/2005-ST dated 03-02-2005 and rebate of the services tax paid under Rule 5 of the said Rules was brought into effect in statute from 19.04.2005. Appellant had filed a refund claim under the said Rule 5 of the Export of Service Rules 2005, on a contention period prior to 19.04.2005, they have exported the services hence eligible to claim to the service tax paid on the input services used for the export of services. Both the lower authorities have held that since notification no. 12/2005 dated 19.04.2005, permits rebate of the service tax paid in the respect of export of output services is effective from 19.04.2005, any export made after 19.04.2005 are only eligible for the refund in the said Rule 5, we are afraid that such an interpretation would defeat the entire wisdom of the government of India in making the export of services competitive in the international market. The view and the findings recorded by both the lower authorities are flawed for more than one reason.
(a) Firstly, we find that the said Rule 5 though brought into statute in Export of Service Rules 2005 from 19.04.2005, cannot be said having applicable only for the exports made from 19.04.2005. In order to appreciate the correct position, we reproduce the relevant part of said rules which reads as under.
5. Where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. It can be seen from the above reproduced Rule that the said Rule talks about granting of rebate of service tax paid and does not speak about that said Rule will be effective from a particular date. The said Rule talks about issuance of notification which in this case is 12/2005 which reads as under.
1. In exercise of the powers conferred by rule 5 of the Export of Service Rules, 2005 (hereinafter referred to as the said rules), the Central Government hereby directs that there shall be granted rebate of the whole of the duty paid on excisable inputs or the whole of the service tax and cess paid on all taxable input services (herein after referred to as input services), used in providing taxable service exported in terms of rule 3 of the said rules, to any country other than Nepal and Bhutan, subject to the conditions, limitations and procedures specified hereinafter, -
2.?Conditions and limitations :-
(a) that the taxable service has been exported in terms of rule 3 of the said rules and payment for export of such taxable service has been received in India in convertible foreign exchange;
(b) that the duty, rebate of which has been claimed, has been paid on the inputs;
(c) that the service tax and cess, rebate of which has been claimed, have been paid on the input services;
(d) the total amount of rebate of duty, service tax and cess admissible is not less than five hundred rupees;
(e) no CENVAT credit has been availed of on inputs and input services on which rebate has been claimed; and
(f) that in case, -
(i) the duty or, as the case may be, service tax and cess, rebate of which has been claimed, have not been paid; or
(ii) the taxable service, rebate for which has been claimed, has not been exported; or
(iii) CENVAT credit has been availed on inputs and input services on which rebate has been claimed, the rebate paid, if any, shall be recoverable with interest as per the provisions of section 73 and section 75 of the Finance Act, 1994 (32 of 1994) as if no service tax and cess have been paid on such taxable service.
3.?Procedure :-
3.1. Filing of declaration. - The provider of taxable service to be exported shall, prior to date of export of taxable service, file a declaration with the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, describing the taxable service intended to be exported with, -
(a) description, quantity, value, rate of duty and the amount of duty payable on inputs actually required to be used in providing taxable service to be exported;
(b) description, value and the amount of service tax and cess payable on input services actually required to be used in providing taxable service to be exported.
3.2 Verification of declaration. - The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall verify the correctness of the declaration filed prior to such export of taxable service, if necessary, by calling for any relevant information or samples of inputs and if after such verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise is satisfied that there is no likelihood of evasion of duty, or as the case may be, service tax and cess, he may accept the declaration.
3.3 Procurement of input materials and receipt of input services. - The provider of taxable service shall, -
(i) obtain the inputs required for use in providing taxable service to be exported, directly from a registered factory or from a dealer registered for the purposes of the CENVAT Credit Rules, 2004 accompanied by invoices issued under the Central Excise Rules, 2002;
(ii) receive the input services required for use in providing taxable service to be exported and an invoice, a bill or, as the case may be, a challan issued under the provisions of Service Tax Rules, 1994.
3.4?Presentation of claim for rebate. -
(a) (i)?claim of rebate of the duty paid on the inputs or the service tax and cess paid on input services shall be filed with the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, after the taxable service has been exported;
(ii)?such application shall be accompanied by, a. invoices for inputs issued under Central Excise Rules, 2002 and invoice, a bill, or as the case may be, a challan for input services issued under Service Tax Rules, 1994 in respect of which rebate is claimed;
b. documentary evidence of receipt of payment against taxable service exported, payment of duty on inputs and service tax and cess on input services used for providing taxable service exported, rebate of which is claimed;
c. a declaration that such taxable service, has been exported in terms of rule 3 of the said rules, along with documents evidencing such export.
(b) The jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, having regard to the declaration, if satisfied that the claim is in order, shall sanction the rebate either in whole or in part.
Explanation 1.- service tax and cess for the purposes of this notification means,-
(a) service tax leviable under section 66 of the Finance Act, 1994; and (b) education cess on taxable service levied under section 91 read with section 95 of the Finance (No. 2) Act, 2004 (23 of 2004).
Explanation 2. - duty for the purposes of this notification means, duties of excise leviable under the following enactments, namely :-
(a) the Central Excise Act, 1944 (1 of 1944);
(b) the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957);
(c) the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978);
(d) National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), as amended by section 169 of the Finance Act, 2003 (32 of 2003), section 3 of the Finance Act, 2004 (13 of 2004) and further amended by clause 123 of the Finance Bill, 2005, which clause has the force of law by virtue of the declaration made under the Provisional Collection of Taxes Act, 1931 (16 of 1931);
(e) special excise duty collected under a Finance Act;
(f) additional duty of excise as levied under section 157 of the Finance Act, 2003 (32 of 2003);
(g) Education Cess on excisable goods as levied under section 91 read with section 93 of the Finance (No. 2) Act, 2004 (23 of 2004); and
(h) the additional duty of excise leviable under2 [section 85 of the Finance Act, 2005 (18 of 2005)]. It can be seen from the above reproduced notification that the said notification also does not indicate that an assessee has to export the services on or after 19.04.2005 to avail benefit of rebate of CENVAT credit. A plain reading of the notification indicates that taxable services has to be exported in terms of Rule 3 and payment of export of such taxable services has to be received in India in convertible foreign exchange and the duty/tax has been paid on input or input services. All these contentions are satisfied in this appeal filed by the appellant.
(b) Secondly, this bench in the case of WNS global services Pvt. Ltd. (supra) on similar set of facts in respect of refunds under rule 5, held as under.
9. We are however in agreement with the last plea taken by the appellants that the refund claim filed by them on 26.4.2006 onwards will be governed by the rules as it stood on those dates. The substituted Rule 5, nowhere suggests or says, that it will apply for exports made after 14.3.2006. Hence any claim filed on or after 14.3.2006 which satisfies other requirements of the rules and notification issued there under, cannot be turned down on a ground which is not a condition or requirement of the rule or notification. A statute cannot be treated retrospective merely because it relates to the past action. A stature which takes away or impairs vested rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transaction already past alone is called a retrospective legislation. The position that a prospective benefit under a statutory provision is measured by or depends on antecedent facts does not make the provision retrospective. As pointed by the ld. Counsel for the appellant, this has also been stated in the Principle of Statutory Interpretation by G.P. Singh at Pages 462-468 of the 9th Edition that statutes conferring prospective benefit on antecedent facts does not necessarily make the provisions retrospective. Reference in this regard has been made to the Supreme Court decision in the case of Gouche Pierre Andre v. Superintendent, Central Jail, Tihar, New Delhi, AIR 1975 SC 164=(1975) 1 SCC 192 wherein Para 2 the Supreme Court held that benefit to set of preconviction detention period against the term of imprisonment conferred by Section 428 of the Criminal Procedure Code, 1974 where an accused person, has, on conviction been sentenced to imprisonment for a term is also available where the sentence was imposed before the commencement for the code to reduce the unserved portion of the sentence and that in so construing the section it was not given any retrospective effect for it did not affect the sentence already undergone but affected only that part of the sentence which remained to be served in future. The above reproduced ratio would squarely cover, the matter in the case in hand. The revenue was aggrieved by such a view expressed by the bench and preferred an appeal before Honble High Court of Bombay, their Lordships, vide their judgment and order dated 10th February, 2011 (as reported at 2011(22) STR 609) disposed of the appeal by recording as under.
9. The above finding of the CESTAT cannot be faulted because substituted Rule 5 of the Cenvat Credit Rules, 2004 does not make any distinction between exports made prior to 14.3.2006. In other words, as per the substituted Rule 5 refund of unutilized cenvat credit in respect of exports effected in the past is available to the manufacturer as well as provider of output service. Proviso to Rule 5 as it stood prior to the amendment on 14-3-2006 clearly provides that refund of unutilized credit is available to the therein. As noted earlier the appellant fulfills all other conditions. Thus, reading the Rule 5 as it stood prior to its amendment, as a whole, it is evident that refund of unutilized credit is allowable not only to manufacturers but also available to providers of output service. It can be seen from the above reproduced ratio that the higher judicial forums are holding that when it comes to substantial benefit the absence of specific embargo in the rules, the benefit should not be denied to an assessee.
7. Applying the same ratio in the case in hand, we find that the impugned order is unsustainable. The impugned order is set aside and the appeal is allowed with the consequential relief, if any.
(Dictated in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) akp 1 11 APPEAL No.ST/454/11-Mum