Case Law Details
Roop Telesonic Ultrasonix Limited Vs Commissioner of Customs (CESTAT Ahmedabad)
Service Tax refund to SEZ unit cannot be denied for registering under service Tax after filing refund claim
Roop Telesonic Ultrasonix Limited filed an appeal against the rejection of their service tax refund claim under Notification No. 12/2013-ST dated 01.07.2013 by the Commissioner of Customs. The rejection was based on the grounds that the appellant had not obtained Service Tax registration before filing the refund claim, as required by the notification.
Shri R R Dave, the appellant’s representative, argued that the appellant had indeed obtained the registration on 14.07.2015, after realizing the omission. He contended that since the registration had been obtained, the condition of the notification had been fulfilled, and therefore, the refund should not have been rejected. He further emphasized that any lapse in obtaining registration was merely procedural and should not result in the denial of the refund, especially when the payment of service tax and its usage in the Special Economic Zone (SEZ) were not in dispute.
In support of his argument, Shri Dave cited various judgments including Manubhai & Co. vs. CST, Ahmedabad, Zydus Hospira Oncology Pvt Ltd. vs. Commissioner of Central Excise, Ahmedabad, Devarsons Industries Pvt. Ltd. vs. Commissioner of Central Excise, Ahmedabad-II, Vijay Cotton & Fibre Co. vs. Commissioner of Service Tax, Mumbai, Commissioner of Central Excise vs. AIA Engineering Pvt. Ltd., and Commissioner of Service Tax, Ahmedabad vs. Adani Enterprise Ltd., which held that procedural lapses alone cannot justify the rejection of a refund claim.
On the other hand, Shri Anand Kumar, representing the Revenue, reiterated the findings of the impugned order.
Upon considering the arguments from both sides and examining the records, it was observed that the only reason for the rejection of the refund claim was the appellant’s failure to comply with the condition specified under Clause-III Sub-clause (c) of the Notification. This clause mandated obtaining Service Tax registration before filing the refund claim.
However, it was noted that according to Sub-clause (g) of the same clause, even if the appellant had not obtained registration earlier, they could do so before filing the refund claim. In this case, although the appellant did not have the registration before filing the refund application, they had obtained it subsequently on 14.07.2015. Therefore, it was concluded that the condition of the Notification had been fulfilled as the appellant had the registration at the time of rejection of the claim.
Furthermore, it was highlighted that the requirement to apply for registration before filing the refund application was merely a procedural one. The substantial benefit of refund should not be denied for a procedural breach, especially when the payment of service tax and its utilization in the SEZ were not in dispute. Additionally, it was pointed out that Section 26 of the SEZ Act exempts taxes and duties on inputs or input services received and used within the SEZ. This statutory provision overrides any other act, indicating that service tax is not leviable on services received within the SEZ.
Consequently, it was concluded that the appellant was legally entitled to the refund, and the impugned order was set aside. The appeals were allowed with consequential relief.
In summary, the case emphasizes that a service tax refund to a Special Economic Zone (SEZ) unit cannot be denied solely because the unit registered under Service Tax after filing the refund claim. Such procedural lapses should not hinder the entitlement to a refund, especially when the substantive conditions for refund eligibility are met.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
This appeal is directed against Order-In-Appeal No. OIA-AHM-EXCUS-003-APP-035-036-16-17 dated 13/06/2016 which is impugned herein whereby the appellant’s refund claim made under Notification No. 12/2013-ST dated 01.07.2013 was rejected on the ground that the appellant have not complied with the condition of notification clause-III sub-clause(C) in as much as the appellant have not obtained the Service Tax registration before filing the refund.
2. Shri R R Dave, Learned Consultant appearing on behalf of the appellant submits that the appellant after filing the refund claim when realized that they are supposed to obtain the service tax registration, they made an application and obtained registration on 14.07.2015. It is his submission that once the registration has been obtained compliance of the condition stand made therefore, the refund could not have been rejected.
2.1 He further submits that even if there is a lapse it is a procedural lapse. Since, the payment of service tax and use of the service in the SEZ is not under dispute, refund is liable to the sanctioned. He placed reliance on the following judgments:-
- Manubhai & Co. Vs. CST, Ahmedabad, reported in 2011 (21) S.T.R. 65 (Tri.-Ahmd.)
- Zydus Hospira Oncology Pvt Ltd. Vs. Commissioner of Central Excise, Ahmedabad, reported in 2013 (30) S.T.R. 487 (Tri.-Ahmd.)
- Devarsons Industries Pvt. Ltd. Vs. Commissioner of Central Excise, Ahmedabad-II, reported in 2014 (33) S.T.R. 197 (Tri-Ahmd.)
- Vijay Cotton & Fibre Co. Vs. Commissioner of Service Tax, Mumbai, reported in 2014 (36) S.T.R. 1164 (Tri-Mumbai)
- Commissioner of Central Excise Vs. AIA Engineering Pvt. Ltd, reported in 2014 (36) S.T.R. 1236 (Guj.)
- Commissioner of Service Tax, Ahmedabad Vs. Adani Enterprise Ltd., reported in 2015 (37) S.T.R. 667 (Tri.- Ahmd.)
Whereby it was held that merely for procedural lapse refund cannot be rejected
3. Shri Anand Kumar Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. On careful consideration of the submission made by both the sides and perusal of record, I find that the only reason for rejection of refund claim filed by the appellant under Notification No. 12/2013-ST is that the appellant have not complied with the condition provided under Clause-III of Sub-clause (c) of the Notification whereby the appellant was supposed to obtain service tax registration in order to claim the refund. The relevant conditions are reproduced below:-
“(III) The refund of service tax on (i) the specified services that are not exclusively used for authorised operation, or (ii) the specified services on which ab-initio exemption is admissible but not claimed, shall be allowed subject to the following procedure and conditions, namely
(a)….
(b)..
the SEZ Unit or Developer who is registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made there under, or the said Act or the rules made there under, shall file the claim for refund to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, the as the case may be, in Form A-4;
(d) to (f)
(g) the SEZ Unit or the Developer who is not so registered under the provisions referred to in clause (c), shall, before filing a claim for refund under this notification, make an application for registration under rule 4 of the Service Tax Rules, 1994.”
4.1 From the above condition of the Notification, the assessee is required to obtain a registration before filling a refund claim in terms of Clause-III Sub-clause (c) of Notification. However, as per sub-clause (g) even if the appellant has not obtained the registration they may obtain registration before filing the refund claim. As per the facts of the present case the appellant though did not obtain the registration before filing the refund application but subsequently on 14.07.2015 they had obtained registration. After obtaining the registration, in my considered view the condition of the Notification provided under clause (c) stands made and on that account refund could not have been rejected as at the time of rejection of claim the appellant had registration in possession. Therefore, considering the same refund should have been sanctioned.
4.2 Moreover, even as per the condition the appellant is required to apply for the registration prior to filing the refund application. This condition is merely a procedural requirement and for breach of the procedural condition the substantial benefit of refund cannot rejected, particularly when the payment of service tax and use of service in the SEZ is not under dispute. Moreover, Section 26 of SEZ Act provides that no tax/ duties are leviable on the input or input service received and use in the SEZ. As per this statutory provision which override any other Act, the service tax is not leviable on the service received in SEZ. Accordingly, the tax paid on the service needs to be refunded. Therefore, in my considered view the appellant is legally entitled for the refund.
5. Hence impugned order is set aside. Appeals are allowed with consequential relief.
(Dictated and pronounced in the open court)
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