Refund of Service Tax - Amendment by notification 33/2008 to notification 41/2007 enhancing refund quantum to 10 per cent of FOB value of export goods is not retrospective - Appeal dismissed: CESTAT

ST - Refund of Service Tax - Amendment by notification 33/2008 to notification 41/2007 enhancing refund quantum to 10 per cent of FOB value of export goods is not retrospective - Appeal dismissed: CESTAT 

MUMBAI : Sr. no. 15 inserted in the Schedule to notification 41/2007-ST by amending notification

17/2008-ST dated 01.04.2008 contained the following condition in column 4 -

(vi) refund of service tax shall be restricted to actual amount of service tax paid or service tax calculated on two per cent of FOB value of export goods, whichever is less.

The parent notification 41/2007-ST (as amended) was again amended by notification 33/2008-ST dated 07.12.2008 and whereby -

(2) in the Schedule, -

(i) againstSr.No.15, in column (4), in item (vi), for the words "two per cent.", the words "ten per cent." shall be substituted;

The issue in this appeal revolves around this amendment.

The relevant facts that arise for consideration are that the appellant has filed refund claims of the service tax paid by them on the export of goods under Notification no. 41/2007-ST as amended by notification no. 33/2008-ST dated 07/12/2008. These refund claims were rejected by the lower authorities on the ground that the appellant had claimed excess refund of the service tax paid by commission agent.

Before the CESTAT, the appellant submitted that the refund claim is for the period October 2008 to December 2008 of the service tax paid on the commission paid to the commission agents. It is their submission that for the period October 2008 and November, 2008 as per notification no. 41/2007-ST the refund that can be claimed is of 2% of the FOB value or the actual service tax paid whichever is less. Further, by notification no. 33/2008-ST dated 07/12/2008 the said ‘two percent' was "substituted" by ‘ten percent'. Inasmuch as since they have filed refund claims on 27/06/2009 on which date the amendment by Notification no. 33/2008 was in force they have correctly claimed refund of 10% of the FOB value or the actual service tax paid whichever is less. Moreover, since the words used in Notification no. 33/2008-ST stipulates that the percentage of FOB to be claimed as refund was substituted, it would mean that 10% would be applicable from the date of Notification 41/2007-ST, the appellant submitted.

Reliance is also placed on the apex court decision in Indian Tobacco Association 2005-TIOL-109-SC-CUS and the Board Circular no. 112/6/2009-ST which clarified that the period has been extended for filing the refund claim as per notification no. 33/2008-ST and that this would mean that the said notification would be applicable for other purposes also.

The CESTAT observed -

++ In our considered view, the submissions made by the learned counsel are not in consonance with the law for more than one reason i.e. On a perusal of Notification no. 33/2008-ST we find that the said notification does not indicate that the words ‘ten percent' shall be effective in the Notification 41/2007-ST from the date when it was issued.

++ Secondly, we find that the benefit which has been sought to be given to the appellant is in respect of the exports which were made prior to the Notification came into existence, which in the case in hand, were eligible as per notification 41/2007-ST. In our considered view, the benefit of Notification no. 33/2008 can be claimed by the appellant from 07/12/2008 which is not in dispute as the Revenue has granted the said benefit to the appellant.

The apex court decision relied upon by the appellant was distinguished thus -

"…we find that in the case therein, there was no dispute as to the export of the goods and the benefit on the goods exported were sought to be denied only on the ground that the Port from where the goods were exported was not included in the Notification which were subsequently included by using the words ‘substitution'. The said ratio laid down by the apex court may not be applicable in the case in hand, as in this case the benefit of Notification no. 41/2007-ST was already in existence and was granted to the appellant and benefit of Notification 33/2008 was also granted to the appellant as on the date when it was enacted."

Holding that the order of the first appellate authority was correct and legal and does not require interference, the appeal was rejected.