ST - Appellant raised bills to client viz. Foreign Telecom Operator for service to their customers who visited India and received payments in foreign currency - services amount to export of service - rebate admissible but time bar factor applies: CESTAT
By TIOL News Service
AHMEDABAD, OCT 03, 2015: THE Appellants are engaged in the business of providing Telecommunication service. The Appellants raised Bills to their customers/clients i.e. Foreign Telecom Operator (FTO) for service to their customers, who visited to India. They received amount from FTO in respect of such bills in foreign currency.
They filed rebate claims under Rule 5 of Export of Services Rules, 2005 in respect of Service Tax paid by them.
According to the Revenue, the Appellants rendered Telecommunication services to the inland customers of FTO in India and, therefore, such service cannot be treated as export of service.
The Adjudicating authority rejected the rebate claims and this order was upheld by the lower appellate authority.
In appeal before the CESTAT, the appellant contested the denial of rebate claim on merit as well as on limitation.
Following decisions were cited in support of their stand -
Vodafone Essar Cellular Ltd Vs CCE Pune-II = 2013-TIOL-566-CESTAT-MUM
Vodafone Cellular Ltd Vs CCE Pune-III = 2014-TIOL-319-CESTAT-MUM
CST Mumbai-I Vs Vodafone India Ltd - 2014-TIOL-1794-CESTAT-MUM
GAP International Sourcing (I) Pvt.Ltd. Vs CST - 2014-TIOL-465-CESTAT-DEL
Alpine Modular Interiors Pvt.Ltd. Vs CST (Adj.) New Delhi - 2014-TIOL-517-CESTAT-DEL
Microsoft Corporation (I) Pvt.Ltd. Vs CST New Delhi - 2014-TIOL-1964-CESTAT-DEL
Glyph International Ltd Vs UoI in WP(C)6224/2013, dt.20.03.2014 = 2014-TIOL-560-HC-DEL-ST
Global Energy Food Industries Vs CCE Ahmedabad = 2010-TIOL-337-CESTAT-AHM
It is further submitted that the Notification No.11/2005-ST, dt.19.04.2005 does not indicate any limitation and, therefore, no limitation would be applicable in respect of the rebate claims. [CCE Vs Swagat Synthetics - = 2008-TIOL-666-HC-AHM-CX refers]
The AR submitted that while passing the decision in the case of Vodafone Cellular Ltd (supra) the Bench had not considered various decisions of the Supreme Court, the definition of Telecommunication service and the circulars of Board. Inasmuch as in view of the apex court decision in All India Federation of Tax Practitioners - 2007-TIOL-149-SC-ST Service Tax is a VAT which in turn is destination based consumption tax;that the criteria for taxing event is in India, as the Appellant rendered the service directly to the International Inbound Roamer (IIR) and when the IIR leaves India, the service is concluded.
It is also submitted that decision in Paul Merchants Ltd Vs CCE Chandigarh - 2012-TIOL-1877-CESTAT-Del (relied in the Vodafone Cellular case) is not applicable and furthermore the Board Circular 111/05/2009-ST relied by the Tribunal in that case was not applicable as the subsequent Circular 141/10/2011-ST clarified the situation.
The Bench observed that the Adjudicating authority rejected the rebate claim on merit as well as partly barred by limitation.
It was also noted that the AR had fairly submitted that the facts in the appellant's own case in Vodafone Essar Cellular Ltd (supra) and the present appeal are similar.
After reproducing the relevant portion of the decision of Tribunal - 2013-TIOL-566-CESTAT-MUM, the Bench further observed that the apex court decision in All India Federation of Tax Practitioners (supra) was considered in the Paul Merchant's case and, therefore, the submission by the AR was not correct.
As for rejection of the rebate claim as time barred and the submission of the appellant that there is no scope for invocation of limitation in notfn. 11/2005-ST, the CESTAT extracted the decision in Vodafone Cellular Ltd Vs CCE Pune-III = 2014-TIOL-319-CESTAT-MUM wherein the Bench had inter alia held as under -
"We notice that the provisions of Section 11B of the Central Excise Act, 1944, which deals with refund of excise duties has been made applicable to Service Tax vide Section 83 of the Finance Act, 1994. This would imply that the time-limit of one year from the date of payment of tax for filing of the refund claim would apply in respect of Service Tax refunds also. Even if it is argued that there is no specific time-limit set out in Notification 11/2005-S.T., it is a settled position in law that though the law is silent on the time-limit applicable, a reasonable time-limit has to be read into the law…."
Following the aforesaid decision, the CESTAT allowed the appeal and remanded the matter to the Adjudicating authority for verification as to whether the claims are time barred or not. It is also clarified that the principle of unjust enrichment would not apply as held by the Tribunal in the Appellant's own case Vodafone Cellular Ltd. as the services rendered would amount to export of services.
(See 2015-TIOL-2100-CESTAT-AHM)
