HEG Limited Vs Commissioner (Appeals) GST (CESTAT Delhi)
CESTAT Delhi held that exemption notification should be interpreted strictly. However, once the primary conditions for seeking exemption for GTA are satisfied, exemption cannot be denied for mere procedural lapse.
Facts- The Appellant is engaged in the manufacture of graphite electrodes falling under Chapter Heading 85451100 of the Central Excise Tariff Act, 1985. The Appellant is registered both under Central Excise registration and service tax registration for providing/receiving various taxable services such as Business Auxiliary services, Banking & Financial Services, Cargo Handling service, Consulting Engineers services, Legal services and Renting of Immovable property services, Goods transport agency service etc.
The Appellant filed EXP-1 intimating their intention to avail exemption from service tax under Notification No. 18/2009 dated 07.07.2009 in respect of four services namely Banking & Financial Services, Goods Transport Agency service, Consulting Engineering service and Business Auxiliary services.
The Appellant claimed exemption from service tax under GTA service amounting to Rs. 37,89,292/-. The Appellant also filed EXP1s on 07.05.2014 in the office of the Assistant Commissioner, Central Excise & Service Tax, to avail exemption from service tax under Notification No. 31/2012-ST dated 20.06.2012 for GTA services received during the period April to September 2013.
The Department noted that the EXP-2 were not filed timely and in proper format by the Appellant. Therefore, the Appellant had wrongly claimed exemption under Notification No. 18/2009 dated 07.07.2009 and Notification no. 31/2012 – ST dated 20.06.2012. Accordingly, a Show Cause Notice dated 23.01.2014 was issued for the period from April 2012 to March 2013 proposing a demand of Rs. 37,89,292/- u/s. 73 of the Finance Act, 1994, interest at applicable rate u/s. 75, penalty u/s. 76, 77 & 78 of the Act.
An Order-in-Original was passed by the Joint Commissioner, Customs, Central Excise and Service Tax, confirming the demand raised. Commissioner (A) also upheld the demand.
Conclusion- In the instant case, we note that the primary condition for seeking exemption for GTA, the requirement is to produce a consignment note, and for the commission agent, the amount is required to be indicated. There is neither any allegation in the show cause notice nor any finding in the impugned order that the appellant did not export the goods or that there was no consignment note, or any other document in his name. Therefore, the essential condition for availing the benefit of the said exemption notification stands satisfied.
Held that an exemption notification should be interpreted strictly and the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. As already held above, we find that the appellant has complied with the notification condition as enumerated in column 4 of the aforesaid table. In view of the same, we set aside the demand of duty and interest upheld in the impugned order.
FULL TEXT OF THE CESTAT DELHI ORDER
1. M/s. HEG Limited., Plot No.6, 62, 67, 68, Sector-A, Industrial Area, Mandideep, Dist Raisen (M.P.)1 have filed the present appeal against the Order-in-Appeal dated 31.07.2017 passed by Commissioner (Appeals), Bhopal (M.P.). Commissioner (Appeals) has confirmed the demand of service tax of Rs.37,89,2921/- and Rs.16,82.9061/- for the period from April 2012 to March 2013 and April 2013 to September 2013 respectively along with interest under Section 75 of the Finance Act, 19942 and penalty under Section 77 and Section 78 of the Act. The Adjudicating Authority has restrained from imposition of penalty under Section 76 of the Act.
2. The Appellant is engaged in manufacture of graphite electrodes falling under Chapter Heading 85451100 of the Central Excise Tariff Act, The Appellant is registered both under Central Excise registration No.AAACH6184KXM004 and service tax registration No. AAACH66184KST00 1 for providing/receiving various taxable services such as Business Auxiliary service, Banking & Financial Service, Cargo Handling service, Consulting Engineers services, Legal service and Renting of Immovable property service, Goods transport agency service etc.
3. The Appellant filed four EXP-1s on 02.04.2012 and another one on 03.04.2013 in the office of the Deputy Commissioner, Central Excise & Service Tax, Division-II, Bhopal intimating their intention to avail exemption from service tax under Notification No. 18/2009 dated 07.07.2009 in respect of four services namely Banking & Financial services, Goods Transport Agency service, Consulting Engineering service and Business Auxiliary services.
4. The Department vide letters dated 15.10.2012 and 15.04.2013 informed the Appellant that the return has to be filed by the Appellant in form EXP-2. Thereafter, the Division office and Range office sought particulars of payment of service tax.
5. In response, the Appellant filed the return in form EXP-2 on 08.2013 in the office of Deputy Commissioner, Central Excise, Division- II, Bhopal for the period April 2012 to March 2013 for transport of the said goods by Goods Transport Agency services3. The Appellant vide letter dated 16.08.2013 claimed exemption from service tax under GTA service amounting to Rs. 37,89,292/-. The Appellant also filed EXP1s on 07.05.2014 in the office of the Assistant Commissioner, Central Excise & Service Tax, Division- II, Bhopal intimating their intention to avail exemption from service tax under Notification no. 31/2012 – ST dated 20.06.2012 for GTA services received during the period April to September, 2013. The Appellant filed the return in form EXP-2 to the department on 07.05.2014 for the period April, 2013 to September 2013.
i. The Department noted that the EXP-2 were not filed timely and in proper format by the Appellant. Therefore, the Appellant had wrongly claimed exemption under Notification No. 18/2009 dated 07.07.2009 and Notification no. 31/2012 – ST dated 20.06.2012 In this regard, two Show Cause Notices were issued:
ii. Show Cause Notice dated 23.01.20144 was issued for the period from April 2012 to March 2013 proposing demand of Rs. 37,89,292/- under Section 73 of the Finance Act, 1994, interest at applicable rate under Section 75, penalty under Section-76, 77 & 78 of the Act.
7. An Order-in-Original dated 20.02.2015 was passed by the Joint Commissioner, Customs, Central Excise and Service Tax, Bhopal confirming the demand raised denying the exemption of Rs. 37,89,292/- and Rs. 16,82,906/-under Section 73 of the Finance Act, 1994, interest at applicable rate under Section 75, penalty of Rs. 10,000/-under Section-77 and penalty of Rs. 37,89,292/- and Rs. 16,82,906/- under Section-78 of the Act.
8. Aggrieved by the said order, the appellant filed an appeal against order-in-original dated 20.02.2015. The Commissioner (Appeals), vide impugned Order-in-Appeal upheld the Order-in-Original and confirmed the demand of service tax of Rs. 54,72,198/- against the Appellant under GTA Service by denying the benefit of the exemption notifications to the Appellant.
9. The learned counsel appearing for the appellant submitted that Appellant is a manufacturer /exporter of graphite electrodes and has used GTA service for transportation of the said goods to port of export. Therefore, the Appellant availed exemption from service tax on taxable services received by them under Notification No. 18/2009-ST dated 7.2009 and Notification No. 31/2012 dated 20.06.2012.
10. He submitted that the impugned order traveled beyond the scope of the show cause notice and is required to be set-aside. He submitted that show cause notice is the foundation of the case and since the appellate authority had taken note of the fact that the information/documents were not in the proper format of table A and table B as required in the return EXP-2. He contended that there were no allegations in the show cause notice with respect to the failure to file the shipping bills/bills of export and failure to file the details of use of subject services in exports.
11. He further contended that the said Notifications grant exemption from service tax in respect of GTA services provided to an exporter for transport of goods by GTA in a goods carriage from any container freight station or inland container depot to the port or airport, as the case may, from where the goods are exported or services provided to an exporter in relation to transport of the said goods by GTA in a goods carriage directly from their place of removal to an inland depot, a container freight station or port or airport. Therefore, effectively the said Notifications exempts service tax in respect of GTA services, if are used in export of goods. In the present case, there is no dispute as regards to the actual export of goods by the Appellant.
12. Further, by way of the said Notifications, the Government has imposed certain conditions and has also prescribed certain procedures which are to be followed in order to avail exemption under the said The essential conditions and procedures prescribed under both the Notification are same and all the conditions and procedures were duly followed by the Appellant.
13. With respect to GTA services, the condition is that the exporter has to produce the consignment note, issued in Appellant’s name. He submitted that the invoices issued to Appellant serve as the consignment The same is evident from the invoices enclosed wherein the loading details are indicated and such invoices was submitted along with the return. Therefore, this condition is satisfied by appellant.
14. He further added that the Appellant has satisfied all the conditions of the Notification 18/2009-ST and Notification No 31/2012 and the benefit of the notifications cannot be denied to the Appellant merely on the ground that they have not complied with some procedural
15. The learned counsel further stated that the issue stands settled in favour of the Appellant by the decision of CESTAT in the case of Coromandel Stampings & Stones Ltd. Vs. CCE.6 wherein the Tribunal held that when there is no dispute on export of goods, failure to inform the Authorities by filing of EXP-1 and delay in filing of EXP-2 is merely a procedural lapse and benefit of the Notification No. 18/2009 dated 07.07.2009 cannot be denied to the exporter.
“5. It is submitted by the learned Consultant appearing for the appellant, that all the conditions, except the condition that the appellant has to intimate the concerned Asst./Dy. Commissioner by filing Form-EXP-1 was not complied. So also, appellant failed to submit the return in Form EXP-2 as stipulated in sub-clause (c) of the conditions stated in the Notification. Needless to say that exemption/refund/rebate etc. are export oriented schemes. If the fact of export has been established, refund is not to be denied on merely technical interpretation of procedures. In Suksha International Vs. Union of India – 1989 (39) E.L.T. 503 (S.C.) the Hon’ble Apex Court has observed that an interpretation unduly restricting the scope of beneficial provision is to be avoided, so that it may not take a way with one hand, what the policy gives with the other. The Hon’ble Apex Court in Mangalore Chemicals and Fertilizers Ltd. Vs. Dy. Commissioner, 1991 (55) E.L.T. 437 (S.C.) while drawing a distinction between procedural condition of a technical nature and substantive condition, held that procedural conditions of technical nature can be condoned. The procedures prescribed in the notification are to facilitate verification of the claims. Since there is no dispute with regard to the export made or the service tax paid, the non-fulfilment of the conditions in my view is condonable. Following the judgments laid in the above cases, I am of the view that the non-fulfilment of the conditions is only a procedural lapse and can be condoned. In view thereof, I hold that the appellants are eligible for refund.”
16. He also relied on the case of Radiant Textiles Ltd. Vs. CCE7 wherein the Tribunal held that non-filing of documents and EXP-1 and EXP-2 cannot be the basis of denial of the exemption notification to the Procedural lapses cannot deny substantive benefit to the assessee. In this context, he drew attention to the following decisions of the Tribunal:
i. General Manager, Telecom, BSNL Vs CCE, Raipur8 In this case, Hon’ble Tribunal held that substantial benefit cannot be denied in such cases merely because some aspects of the procedure had not been followed. It also observed that such adjustment has been permitted by the CESTAT in BSNL’s own case. The relevant paragraph of the decision is as under:
2…………………….
The appellant has contended that a mere procedural infringement should not result in denial of a substantive benefit. They have referred to the following judgments in their support:
(1) M/s. BSNL Vs. CCE, Chandigarh9 – where the Hon’ble CESTAT permitted such adjustment observing that the rules are not tyrants but servant of law and should not be read in a pedantic manner while the appellant is entitled substantial relief.
(2) M/s. Nirma Architects & Valuers Vs. CCE, Ghaziabad10 in which similar adjustment was permitted.
(3) CCE, New Delhi Vs. Sentinel Security (P) Ltd.11 where the Tribunal observed that the assessee has paid extra tax and in the subsequent returns they have adjusted that amount and that although they did not follow the prescribed procedure, in the interest of justice when there is no dispute with regard to the extra payment, we do not find any infirmity in the view taken by the Commissioner (Appeals) allowing such adjustment.
(4) M/s. Bharti Cellular Ltd. Vs. Commissioner12 the CESTAT held a similar view.
3. The learned DR did not object to the relevance of the case laws
4. We have considered the facts and the submissions made in this As is evident from the several judgments cited above, it has been consistently held that substantial benefit cannot be denied in such cases merely because some aspects of the procedure had not been followed. Indeed, such adjustment has been permitted by the CESTAT in BSNL’s own case cited in the earlier para. In the present case there has been no mala fide on the part of the appellant as is evident from the fact that the adjudicating authority refrained from imposing any penalty observing that he appellant acted in a bona fide manner and mala fide cannot be attributed to them.
(emphasis supplied)
17. Therefore, applying the ratio of the case laws above, it was submitted that substantive benefit cannot be denied due to mere procedural lapse. Reliance was also placed on the decision of Appellant itself reported at HEG Ltd. Vs. Commissioner of Customs, Central Excise and Service Tax, Bhopal13 wherein exemption benefit has been allowed under Notification No. 18/2009-ST under similar circumstances including late filing of the aforesaid returns.
18. Further, in various decisions, the exemption benefit has been allowed under the aforesaid notifications even in cases where the return in Form EXP-2 has not been filed. Few of such decisions are cited as under:
