CESTAT allows Refund of Input Service Tax paid in Respect of Export of Cut and Polished Diamonds [Read Order]

The Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) found no merit in the Principal Additional Director General's order denying the refund of input service tax and subsequently approved the refund of ₹2, 17,230 for the Input Service Tax paid on the export of cut and polished diamonds. The current appeal addresses a dispute concerning the refund of service tax paid on input services utilized by the appellants, a manufacturer of cut and polished diamonds, for the export of goods. This matter is governed by Notification No. 41/2012-ST dated June 29, 2012. The appellants, registered with the Gem & Jewellery Export Promotion Council under Service Tax registration No. AAAFL0356LST001, sought a refund for service tax related to exports made between October 2015 and March 2016. They submitted their refund application on September 30, 2016, to the jurisdictional authorities. Upon review, the Assistant Commissioner (Refund-II) determined that the application required consideration by the Commissionerate of Service Tax-II, Mumbai, forwarding it accordingly on November 23, 2016. Be a GST Expert: Get Essential Questions, Key Judgements and Practical Guide, Click Here Following scrutiny, the jurisdictional Assistant Commissioner (Refund) acknowledged that the appellants, as manufacturers, had exported excisable goods during the relevant period. He confirmed that all services used in exporting these goods were eligible for refund under the aforementioned notification. Moreover, he found that the refund amount claimed was within the specified limits set forth in the notification. Dissatisfied with this initial ruling, the department filed an appeal with the Commissioner (Appeals) on April 4, 2017. The appeal was upheld on the grounds that the input service tax invoices were addressed to the appellants' office at Bandra-Kurla Complex, an address not reflected in their service tax registration details. Consequently, the Order-in-Appeal dated May 17, 2018, rejected the originally sanctioned refund, prompting the appellants to appeal before the Tribunal. Be a GST Expert: Get Essential Questions, Key Judgements and Practical Guide, Click Here D.A. Bhalerao, representing the appellants, argued that the denial of the refund was based on procedural issues that were rectifiable. He asserted that the appellants complied with the substantive conditions outlined in Notification No. 41/2012-ST. further highlighted that the appellants had filed their refund claim with the Commissioner of Service Tax-IV, Mumbai, where their Bandra-Kurla Complex office is jurisdictionally registered, following a notification of their address change dated April 20, 2014. It was also indicated that the appellants had notified the Assistant Commissioner of Service Tax about their address change on April 28, 2014, with the necessary documentation submitted to the office. He contended that the appellants had fulfilled all obligations concerning their refund claim filed on September 30, 2016, and were thus entitled to the sanctioned refund. Be a GST Expert: Get Essential Questions, Key Judgements and Practical Guide, Click Here A.K. Shrivastava, representing the Revenue, reiterated the findings of the Principal Additional Director General, DGPM, Customs & Central Excise, Western Regional Unit, as outlined in the contested order. After reviewing the arguments presented by both sides and perusing the case records, the Tribunal focused on whether the service tax paid on input services related to the export of cut and polished diamonds between October 2015 and March 2016 was refundable under Notification No. 41/2012-ST. The Tribunal noted that the refund process outlined in the notification permits refunds for service tax paid on specified services used in the export of goods. The original authority had confirmed that the appellants had adhered to all required procedures and conditions, resulting in the approval of their refund. However, the Principal Additional Director General denied the refund based on discrepancies regarding the registered address of the appellants, which was listed as 201-A, Dharam Palace, Gamdevi, Mumbai, while their supporting documents referenced the Bharat Diamond Bourse office. Be a GST Expert: Get Essential Questions, Key Judgements and Practical Guide, Click Here Further emphasized that, for claiming the refund, the primary requirement is the appellants' registration as exporters with the Gem & Jewellery Export Promotion Council. It was noted that the appellants had complied with all necessary registration conditions, including their service tax registration with the relevant authorities. The Single Bench of the tribunal, comprising M.M. Parthiban (Technical Member), found no merit in the Principal Additional Director General's order that denied the refund of input service tax. The Tribunal concluded that the impugned order was not supported by legal scrutiny and consequently set aside the order dated May 17, 2018. The appeal was therefore granted in favor of the appellants, entitling them to a refund of ₹2, 17,230, in accordance with applicable law. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates