By TIOL News Service

MUMBAI, JULY 10, 2015: THE CESTAT in the case of Glyph International Ltd. [2013-TIOL-1948-CESTAT-DEL] ruled that an appeal in respect of claim of rebate on input service used in export of service is not maintainable before it in view of Section 35EE of the CEA, 1944 - since it finds specific mention in Section 83 after its amendment in 2012.

On appeal, the High Court [2014-TIOL-560-HC-DEL-ST] held that the amendment to Section 83 by making a specific reference to Section 35EE of the CEA did not make any difference to the nature of jurisdiction exercisable by the CESTAT under Section 86; it continued to possess jurisdiction to decide on matters pertaining to rebate and refund. For this reason, the question of law was answered in favour of the assessee/appellant and against the revenue.

But when the Mumbai CESTAT took a similar decision [2013-TIOL-809-CESTAT-MUM] as that taken by the Delhi Bench of CESTAT (supra) in an appeal filed by Revenue, the Department took the matter in appeal to the Bombay High Court pleading that the right forum to appeal was indeed the CESTAT. And the Bombay High Court agreed with Revenue and the Delhi High Court and allowed the Revenue Appeal holding that such appeals are maintainable before the CESTAT. This order was delivered on 12th February 2015. [See Ambe International - 2015-TIOL-577-HC-MUM-ST]

After winning this case, perhaps the Revenue wanted to experience only a fleeting academic high and, therefore, after a fortnight, when the Finance Bill, 2015 was presented on 28.02.2015, the lawmakers proposed insertion of two provisos in Section 86 (1) of the 1994 Act (Service Tax) (vide clause 115).

The effect of this amendment, the TRU in its letter F.No. 334/5/2015-TRU explained thus -

(x) Section 86 is being amended to prescribe that remedy against the order passed by Commissioner (Appeal), in a matter involving rebate of Service Tax, shall lie in terms of section 35EE of the Central Excise Act. It is also being provided that all appeals filed in Tribunal after the date the Finance Act, 2012 came into effect and pending on the date when the Finance Bill, 2015 receives assent of the President shall be transferred and dealt in accordance with section 35EE of the Central Excise Act.

For the so-called uninitiated, the Finance Act, 2012 came into effect on 28.05.2012 meaning to say that the amendment has retrospective effect from this date. The Finance Bill, 2015 was enacted on 14.05.2015 and the clause referred is now anointed Section 117 of the FA, 2015.

Be that as it may, the sum and substance of all this is : Service Tax Rebate - appeal lies to Government, not CESTAT.

In the present case, appeals were filed by CST, Mumbai-II against the orders passed by the Commissioner(A) on 23.09.2013 and the issue involved in all the appeals is of refund of the CENVAT Credit availed on inputs and input services for the services exported.

It is the submission at Bar that as per Section 117 of the Finance Act, 2015, these cases need to be decided by the Joint Secretary (R), Department of Revenue, Ministry of Finance, Government of India.

The Bench perused the said provisions amending section 86 of the FA, 1994 and upon being satisfied with the submission observed -

"4. On perusal of the said Section 117, we find it so; the said section amends Section 86 of the Finance Act, 1994 by introducing two provisos, which are as under.

"Provided that where an order, relating to a service which is exported, has been passed under Section 85 and the matter relates to grant of rebate of service tax on input services, or rebate of duty paid on inputs, used in providing such service, such order shall be dealt with in accordance with the provisions of Section 35EE of the Central Excise Act, 1944.

Provided further that all appeals filed before the Appellate Tribunal in respect of matters covered under the first proviso, after the coming into force of the Finance Act, 2012, and pending before it up to the date on which the Finance Bill, 2015 receives the assent of the President, shall be transferred and dealt with in accordance with the provisions of Section 35EE of the Central Excise Act, 1944."

It can be seen that these appeals now needs to be decided by the Government of India, as per Section 35EE of the Central Excise Act, 1944."

Accordingly, the CESTAT directed the Registry to transfer all these cases to Government of India, with intimation to both sides.

The appeals were disposed of as ordered above.

In passing : For more, see DDT 2555.

(See 2015-TIOL-1387-CESTAT-MUM)