Refund Rejection Set Aside as Limitation Computable from Quarter of FIRC Receipt: CESTAT Chennai

Lister Technologies Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, allowed the appeals filed by the appellant against the order rejecting portions of refund claims of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004. The dispute concerned the determination of the relevant date for computing the one-year limitation period prescribed under Section 11B of the Central Excise Act, 1944.

The appellant, engaged in providing Information Technology Software Services and Business Auxiliary Services, had filed three refund claims for the quarters January–March 2014, April–June 2014, and July–September 2014. While substantial portions of the claims were sanctioned, certain amounts were rejected on the ground that some export invoices were more than one year old on the date of filing the refund applications. The authorities treated the date of the export invoice as the relevant date for limitation purposes. Appeals before the Commissioner (Appeals) were also dismissed.

The appellant argued that for export of services, the limitation period should be computed either from the date of receipt of foreign remittance or from the end of the quarter in which the Foreign Inward Remittance Certificate (FIRC) was received. Reliance was placed on the Larger Bench decision in CCE & CST, Bengaluru v. Span Infotech (India) Pvt. Ltd., which held that where refund claims are filed quarterly, the relevant date for limitation is the end of the quarter in which the FIRC is received. The appellant also cited subsequent decisions that had followed the same principle.

The Revenue contended that the limitation issue stood settled by the Madras High Court decision in GTN Engineering (I) Ltd., which held that for Rule 5 refunds, the relevant date is the date of export. It further argued that Notification No. 14/2016-CE (NT), which linked limitation to receipt of foreign exchange in certain situations, operated only prospectively and could not apply to earlier periods.

The Tribunal examined the Larger Bench ruling in Span Infotech, which had specifically considered the Madras High Court judgment cited by the Revenue. The Larger Bench observed that Section 11B does not specifically provide a relevant date for export of services and that export of services is completed only upon receipt of consideration in foreign exchange. It therefore held that, in cases where refund claims are filed quarterly, the relevant date for computing limitation is the end of the quarter in which the FIRC is received.

The Tribunal emphasized that judicial discipline required a Division Bench to follow a decision of a Larger Bench unless it had been modified or set aside by a higher forum. As the Revenue had not shown that the Span Infotech decision had been overturned, the Tribunal followed it.

Noting that the appellant had not pressed the small portion of the refund claim relating to credit notes, the Tribunal set aside the remaining part of the impugned order concerning limitation. It held that the limitation for Rule 5 refund claims filed quarterly is to be reckoned from the end of the quarter in which the FIRC is received. The appellant was held entitled to consequential relief in accordance with law, and the appeals were disposed of accordingly.

FULL TEXT OF THE CESTAT CHENNAI ORDER

These appeals are filed by the appellant against Order in Appeal No. 71 to 73/2017 (STA – II) dated 21.02.2017 passed by the Commissioner of Service Tax (Appeals – II), Chennai (impugned order).

Factual Matrix

2. Brief facts of the case are that the appellant is providing services under the category of Information Technology Software Service, Business Auxiliary Service etc. The appellant filed three refund claims as detailed below:-

The refund claim is governed by Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 27/2012-CE(NT) dated 18.06.2012, which provides that refund claims must be filed within the period prescribed under Section 11B of the Central Excise Act, 1944. After due process of law, the Ld. Adjudicating Authority sanctioned part of the refund claims and disallowed the remaining refund claims treating the date of export invoice as the relevant date for limitation. The appeals preferred by the appellant before the Ld. Commissioner (Appeals) were dismissed. Hence the present appeals.

3. The learned Advocate Shri Shiva Kumar G appeared for the appellant and Ld. Authorized Representative Shri M. Selvakumar appeared for the respondent.

Submissions made by the appellant.

3.1 Shri Shiva Kumar G the Ld. Advocate submitted that:

A. The dispute concerns refund of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules. The refund claim was filed within one year, reckoned either from the date of receipt of foreign remittance or from the end of the relevant quarter, as applicable.

B. The department observed that some export invoices were more than one year old on the date of filing the refund claim as per the date on the export invoice. Accordingly, refund relating to such invoices was rejected.

C. In OIO No. 85/2016 (R), refund of ₹30,372 was also rejected on account of credit notes for domestic turnover; that part is not pressed before this Tribunal in view of the small amount involved.

D. For quarterly refund claims relating to export of services under Rule 5 the one-year limitation under Section 11B be computed from the end of the quarter in which the FIRC is received, as held by the Larger Bench decision in CCE & CST, Bengaluru Vs Span Infotech (India) Pvt. Ltd., – 2018 (2) TMI 946.

E. This view has been consistently followed in later decisions, including:

i. Mahima Technology Pvt. Ltd. Vs CGST & CE, Salem, 2025 (7) TMI 1543

ii. Miramed Ajuba Solutions Pvt. Ltd., 2023 (4) TMI 214

iii. Fisher Chennai Engineering Centre, 2023 (9) TMI 1066 The Ld. Counsel hence prayed that the impugned order may be set aside and the appeal allowed.

Submissions made by the Respondent-Revenue.

3.2 Shri M. Selvakumar Ld. Authorized Representative, took us through the orders of the subordinate authorities and submitted on behalf of Revenue that:

A. Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 27/2012-CE(NT) dated 18.06.2012, which provides that refund claims must be filed within the period prescribed under Section 11B of the Central Excise Act, 1944.

B. The issue of limitation stands settled by the judgment of the Madras High Court in CCE, Coimbatore Vs GTN Engineering (I) Ltd. [(2012(281) ELT.185(Mad.)], which held that, for refund of Cenvat credit under Rule 5, the limitation period of one year under Section 11B applies, and the relevant date is the date of export. The Hon’ble Court held that though Rule 5 ibid does not prescribe any specific relevant date, it has to be the date on which final products are cleared for export; if any other conclusion is arrived, it will result in disentitling any person to claim of refund of Cenvat credit. Accordingly, the refund claim ought to have been filed within one year from the date of issuance of the export invoice.

C. Further, Notification No.14/2016-CE (NT) dated 01.03.2016 which provided for limitation from the expiry of one year from the date of receipt of payment in convertible foreign exchange in certain circumstances etc., has no retrospective effect and applies only prospectively. This is supported by the Supreme Court’s decision in CC, Bangalore Vs Spice Telecom [2006(203) ELT.538(SC)], which held that, in the absence of an express provision, an exemption notification cannot be presumed to operate retrospectively.

D. Accordingly, for claims pertaining to the period prior to 01.03.2016, the relevant date is the date of export invoice, and the rejection of refund on limitation grounds calls for no interference.

E. As the appellant has abandoned its claim concerning the refund pertaining to credit notes, the same has become final.

The Ld. A.R. prayed that the appeal may be rejected.

Discussion and Analysis

4. After carefully considering the appeal memorandum and bestowing our consideration to the facts and the submissions made by the parties, it is clear that the dispute pertains to the relevant date from which the one-year limitation under Section 11B be computed.

5. We find that the issue of time limit which is in dispute between the parties here has been considered by a Bench of three Ld. Members in Span Infotech (supra), which also considered the judgment of the Hon’ble Madras High Court in GTN Engineering (supra), cited by Revenue here. Relevant portion is extracted below:

“9. Rule 5 of the CENVAT Credit Rules, 2004 provides for refund of unutilized CENVAT credit, even after adjustment of the same for payment of duty of excise or service tax. The conditions, safeguards and limitations for consideration of such refund claims have been spelt out by the Government through notifications. Notification No. 5/2006 (up to 17/06/2012) and Notification No. 27/2012 (w.e.f. 18/06/2012) (as amended) has specified the conditions in this regard. These notifications specify that such refund claims are to be filed within the period specified in Section 11B. The relevant date specified under the above section leaves no room for doubt as far as export of goods is concerned. However as far as export of services is concerned, the various sub-sections specifying relevant date under Section 11B do not cover the case of export of services. Further the exporters of services have been given the option to file claims for such refunds once in a quarter and in respect of 100% EOUs, once in a month. The issue referred to Larger Bench is whether the time limit prescribed under Section 11B in respect of filing of refund claims is to be applied from the date of receipt of payment for export of services or can be considered from the end of the quarter in which such payments have been received.

10. After considering the provisions of the Notifications issued under Rule 5 of the CCR, we note that there is a specific condition that the refund claims are required to be filed within the period specified under Section 11B. Consequently, we are of the view that completely ignoring the provisions of Section 11B may not be appropriate. This view is supported by the decision of Hon’ble Madras High Court in the case of GTN Engineering [(2012(281) ELT.185(Mad.)], wherein Hon’ble High Court has disagreed with the view expressed by Hon’ble Karnataka High court in the case of mPortal [mPortal India Ltd. [2012 (27) STR 134 (Kar.)], that Section 11B will have no application with respect to refund under Rule 5 of CCR.

11. The definition of relevant date in Section 11B does not specifically cover the case of export of services. Hence, it is necessary to interpret the provisions constructively so as to give it meaning such that the objective of the provisions; i.e. to grant refund of unutilized CENVAT credit, is facilitated. By reference to the Service Tax Rules, 1994 as well as the successor provisions i.e. the Export of Service Rules, 2005, we note that export of services is completed only with receipt of the consideration in foreign exchange. Consequently, the date of Foreign Inward Remittance Certificate (FIRC) is definitely relevant. The Hon’ble Andhra Pradesh high Court has held that the date of receipt of consideration may be taken as relevant date in the case of Hyundai Motors [2015 (39) STR 984 (AP)].

12. The related question for consideration is whether the time limit is to be restricted to the date of FIRC or can be considered from the end of the quarter. The Tribunal in the case of Sitel India Ltd. [CST, Mumbai-II Vs. Sitel India Ltd. – 2016-TIOL-818-CESTAT-MUM], has observed that the relevant date can be taken as the end of the quarter in which FIRC is received since the refund claim is filed for the quarter.

13. Revenue has expressed the view that relevant date in the case of export of services may be adopted on the same lines as the amendment carried out in the Notification No. 27/2012, w.e.f. 01/03/2016. Essentially after this amendment the relevant date is to be considered as the date of receipt of foreign exchange. While this proposition appears attractive, we are also persuaded to keep in view the observations of the Hon’ble Supreme Court in the case of Vatika Township [Commissioner of Income-Tax Vs. Vatika Township P. Ltd. [(2014) 367 ITR 466 (SC)] (Constitutional Bench)], in which the Constitutional Bench has laid down the guideline that any beneficial amendment to the statute may be given benefit retrospectively but any provision imposing burden or liability on the public can be viewed only prospectively. Keeping in view the observations of the Apex Court, we conclude that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.

14. With the above observations, we revert the matter to the regular Benches for deciding the respective appeals.”

(emphasis added)

6. Judicial discipline and propriety demands that a Bench of two Members should follow a decision of a Bench of three learned Members. [Pradip Chandra Parija and Others Vs Pramod Chandra Patnaik and Others – AIR 2002 SUPREME COURT 296 – Constitutional Bench]. Further Revenue has not shown that the said Order has been set aside or modified by a superior Authority. We hence respectfully follow the same.

Conclusion

7. Considering the concession made by the appellant regarding the refund pertaining to credit notes, we set aside the remaining part of the impugned order pertaining to limitation alone. The impugned order is modified as stated. The appellant is eligible for consequential relief as per law. The appeals are disposed of accordingly.

(Order pronounced in open court on 29.05.2026)