Absence of Time Limit in Notification allows Exemption Claim “At Any Stage” under Finance Act: CESTAT Rules in Favour of Mars International [Read Order]

The Tribunal ruled that Exemption Can be sought Throughout proceedings if an Exemption Notification does Not include Time Limit or Procedural Restriction

In a major relief to Mars International India Pvt. Ltd., the Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal has reiterated that when an exemption notification under the Finance Act, 1994 does not prescribe any time limit for availing its benefit, the assessee is entitled to claim it at any stage of the proceedings, including during adjudication or on appeal.

The proceedings stemmed from a Service Taxaudit for the period April 2006-October 2011, that culminated in a show-causenotice invoking reverse charge on various activities, such as freight reimbursements, seconded expatriate employees and allocation of research and development expenditure among group entities.

Mars International contended that the benefit of Notification No. 34/2004 could not be denied merely because it had not been claimed earlier in the ST-3 returns. The counsel for the appellant submitted that the appellant is entitled for exemption on the freight amounts, where consignment value is lower than INR 1,500, in view of the said Notification, dated 03.12.2004.

The Department supported the adjudicating authority’s conclusions and argued that the appellant should be denied the benefit on the ground that it never claimed the same in the ST-3 returns filed by appellant.

The Tribunal, comprising Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member), perused the records and examined the issue of exemption under Notification No. 34/2004.

The Bench referred to the Supreme Court’s decision in Share Medical Care, in which Hon’ble Supreme Court ruled “If no time is fixed for the purpose of getting benefit under the exemption notification, it could be claimed at any time.”

The Tribunal ruled unequivocally that the exemption can be sought throughout the proceedings if an exemption notification under the Finance Act does not include any time limit or procedural restriction indicating when the benefit must be claimed. Therefore, the simple fact that the assessee did not claim the benefit in the return or during the early stages of assessment, does not mean that it should be disallowed.

As a result, the Tribunal set aside all tax, interest and penalties imposed on Mars International, allowing the appeal in entirety.