NEW DELHI, FEB 14, 2013: AS per Notification No. 12/2005- S.T dated 19.04.2005, Rebate was granted of the whole of the duty paid on excisable inputs or the whole of the service tax and cess paid on all taxable input services used in providing taxable service exported out of India. Condition 3.1 of the Notification stipulated that:

Filing of declaration. - The provider of taxable service to be exported shall, prior to date of export of taxable service, file a declaration with the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, describing the taxable service intended to be exported with ,-

(a) description , quantity, value, rate of duty and the amount of duty payable on inputs actually required to be used in providing taxable service to be exported;

(b) description , value and the amount of service tax and cess payable on input services actually required to be used in providing taxable service to be exported.

The appellant lodged two claims claiming rebate in respect of service tax paid on input services. In respect of the services rendered by the appellant between 16.03.2005 and 30.09.2005, the claim for rebate was filed on 15.12.2005 and in respect of the services rendered between 01.10.2005 and 31.12.2005, the claim was filed on 17.03.2006. The input services were mainly the night transportation services, recruitment services, bank charges etc. The declaration required to be filed in terms of paragraph 3 of the Notification No.12 (supra) was however filed by the appellant only on 05.02.2007.

The Deputy Commissioner, Service Tax held that since the appellant had not followed the procedure prescribed for obtaining the rebate as laid down in Notification No.12 (supra), it was not entitled to the same. He accordingly rejected the rebate claims which amounted to Rs. 1,98,24,267 and Rs. 1,45,03,718 in respect of the two periods.

The Commissioner of Central Excise (Appeals), New Delhi dismissed the appeals. The Tribunal held that if this condition, though a procedural condition, is violated, the rebate would not be admissible.

The question for consideration is whether the filing of the declaration in terms of paragraph 3 of the notification No.12 on 05.02.2007, after the date of the export of the services, amounted to non-compliance with the condition disentitling the appellant from the rebate claims. The case of the appellant is that given the nature of services rendered by it, it is impossible to give the description, value and amount of the input services used in the services that are exported and that in any case, having regard to the object and purpose of the condition which is to prevent misuse of the rebate claim, there cannot be any objection if the relevant details are furnished in the rebate claim which are capable of verification with the help of documentary evidence which would by then be available. The revenue on the other hand canvasses for the acceptance of the reasoning adopted by the lower authorities including the CESTAT .

The High Court observed,

Now we have to appreciate that in a call centre where there are hundreds of employees attending to calls from abroad at any given point of time, it is next to impossible to anticipate the date of export and with precision demarcate the point of time prior to the export and also determine the point of time when the export may be said to have been completed. What can be the determining factor? Is each call to be considered as an independent export of taxable services? Is the total number of calls attended to on any particular day to be considered as the export of taxable services? Or is the appellant to reckon the calls on a monthly basis? It needs also to be remembered that there is no way of anticipating any call or the number of calls the call centre would be required to attend on a single day, so that the appellant can comply with the requirement of filing a declaration “prior” to the date of export of taxable service. The very bedrock of the business is the attending of calls and given that they are received on a continuous basis, we find it difficult to conceive of any possibility as to how the appellant could not only determine the date of export but also anticipate the call so that the declaration could be filed “prior” to the date of export. In addition to this practically impossible situation, the appellant is also required by the procedure laid out in paragraph 3 of the notification to describe, value and specify the amount of service tax and cess payable on input services actually required to be used in providing taxable service to be exported. With the possible exception of the description, we are unable to appreciate how the service-exporter will be in a position to value and specify the amount of service tax/ cess payable on the input services actually required to be used in providing the exported service. An estimate is ruled out by the use of the word “actually required”; and unless what was actually required is known, it is impossible to value and specify the amount of service tax or cess payable on the input services. That will be known only when the bill or invoice for the input-services is received by the appellant. The bill or invoice is received after the calls are attended to. Thus, it seems to us that in the very nature of things, and considering the peculiar features of the appellant's business, it is difficult to comply with the requirement “prior” to the date of the export.

All the lower authorities, including the CESTAT , are unanimous in their view that the requirement, though one of procedure, is nevertheless inflexible as it is conceived with a view to preventing the evasion of service tax and dispensing with the same would deprive the service tax authorities from carrying out the necessary preventive and audit-checks. The correctness of this view, as a broad proposition, need not be decided in this case. The question here is one of impossibility of compliance with the requirement. If, having regard to the nature of the business and its peculiar features - which are not in dispute - the description, value and the amount of service tax and cess payable on input-services actually required to be used in providing the taxable service to be exported are not determinable prior to the date of export but are determinable only after the export and if, further, such particulars are furnished to the service tax authorities within a reasonable time along with the necessary documentary evidence so that their accuracy and genuineness may be examined, and if those particulars are not found to be incorrect or false or unauthenticated or unsupported by documentary evidence, we do not really see how it can be said that the object and purpose of the requirement stand frustrated. In the present case, no irregularity or inaccuracy or falsity in the figures furnished by the appellant both on 05.02.2007 and in the rebate claims has been alleged. Moreover, it appears

(See 2013-TIOL-119-HC-DEL-ST)