By TIOL News Service

MUMBAI, NOV 27, 2014: THE respondent is registered with department and had exported its services during the period June, 2005 to March, 2006. Pursuant to raising of the invoices and realization of the payments from the consumer of the services, rendered outside India, the respondent deposited Service Tax and thereafter applied for refund on 20.3.2007 for an amount of Rs.1,31,538/- under the provisions of Rule 4 read with Rule 5 of the Export of Services Rules, 2005 read with Notification No. 11/2005-ST dated 19.4.2005.

The refund claim was rejected mainly on the ground that it is time barred in terms of Section 11B of the Central Excise Act as applicable via s.83 of FA, 1994. It was also observed in the adjudication order that the balance-sheet and profit and loss account did not show the ‘Service Tax paid & refund of which has been claimed' as ‘receivable from the Govt.” So, on the additional ground that the claim is hit by the doctrine of unjust enrichment, the refund was rejected.

The Commissioner (A) allowed the assessees appeal with consequential relief holding that neither the claim is time barred nor the doctrine of unjust enrichment stands attracted.

Aggrieved with this order, the Revenue is before the CESTAT and while reiterating the grounds taken while rejecting the claim also urged that the provisions of Section 11B override the provisions of Notification No. 11/2005-ST. Reliance is placed in this regard on the decision in Precision Controls vs. Commissioner of Central Excise, Chennai - 2004-TIOL-751-CESTAT-MAD.

The Bench observed -

“6. …, I find that Rule 4 of the Export of Services Rules provides for export of service without payment of tax as export of service is not exigible to tax. Further, Rule 5 provides for mechanism for rebate in case the tax has been paid mistakenly or by way of abundant caution. Thus, the amount of tax deposited by the assessee herein is not tax but in the nature of deposit. The same not being tax, there is no time limit for refund of deposit as Section 11B applies to refund of duty/tax only. Further, I find that the ruling in the case of Precision Controls (supra) relied upon by the Revenue relates to export of goods and refund under the Central Excise Rules, 1944 and the same is not applicable in the facts of the present case….”

The Revenue appeal was dismissed.

(See 2014-TIOL-2373-CESTAT-MUM)