Service Tax Rebate Can Be Allowed Subject To Receipt Convertible Foreign Exchange Against Each Invoice: CESTAT

The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has observed that unless it is established that against every invoice convertible foreign exchange has been received, the rebate of service tax paid in respect of that invoice cannot be allowed to the exporter.

The bench of Dr. Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) has remanded the matter to the original authority with a direction not to raise any other issue and examine receipt of convertible foreign exchange against individual invoices or set of invoices covered by the rebate claim, and if the foreign exchange is received, then to that extent to allow the rebate.

The appellant/assessee is an exporter of information technology software, and they are registered with Service Tax. The appellant filed a claim for a rebate of Rs. 5,44,51,121 under the provisions of Notification No. 11/2005 dated April 19, 2005, in respect of services exported by them for the period from October 2008 to December 2008. The notification was issued under Rule 5 of the Export of Service Rules, 2005. The rebate claim was filed on August 26, 2009.

It was alleged in the show cause notice that though the appellant had produced copies of invoices along with a copy of the FIRC for the period of export proceeds, there was no correlation between the exported services and the Foreign Inward Remittance Certificate (FIRC).

In the show cause notice, a copy of the agreement with the client was called for verification of the fact that the services were provided outside India. There was also an issue raised with respect to the classification of services. The appellant replied to the show cause notice enclosing copies of the input services (selective), copies of agreements with clients outside India, and also submitted a correlation of export invoices and a FIRC.

The appellant also explained the delay in amending registration for certain services. The appellant also attended a personal hearing. The original authority decided the said rebate claim through an order-in-original dated April 28, 2011.

The original authority, through the order, has held that the appellant was not eligible for availing and utilising Cenvat credit because of a delay in the amendment of registration. He has also held that the appellant had not submitted a statement showing a correlation between the invoice and the receipt of convertible foreign exchange remittances. It was held that documentary evidence to show that the services were rendered outside India was not furnished with documentary evidence. He has, therefore, rejected the refund claim.

The appellant preferred an appeal before the Commissioner (Appeals). The Commissioner (Appeals) decided the appeal through the order-in-appeal. The Commissioner (Appeals) upheld the order passed by the original authority.

The tribunal held that wherever Foreign Inward Remittance Certificates (FIRCs) are issued on a consolidated basis, the exporter should submit self-certified statements along with the FIRC showing the details of the export to which a particular FIRC pertains. It also requires the exporter to maintain a register showing a running account, which should be reconciled between the export and the remittance received periodically.

Counsel For Appellant: Sanjeev Nair

Counsel For Respondent: Deepak Sharma

Case Title: M/s. I Gate Global Solutions Ltd. Versus Commissioner of CGST

Case No.: Service Tax Appeal No. 89251 of 2018

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