Thursday, 19 November 2015

Refund - Notfn 41/2007 - Education cess paid on service tax by service providers is also to be refunded to appellants when export of goods is not in dispute - Appeals allowed with consequential relief: CESTAT

THE issue involved in all appeals is whether the appellants are eligible for the refund of education cess paid on the service tax in respect of port related services, technical testing and analyzing services.
The Commissioner (A) held that appellants are eligible for refund of service tax paid by the service providers but are not eligible for the education cess paid on the service tax by the service providers and relied upon the conditions of Notification No.41/2007-ST to hold that the said Notification contemplates for the refund of service tax paid and not education cess. While arriving at this conclusion the lower appellate authority placed reliance on the decision in Balasore Alloys Ltd. - 2010-TIOL-1659-CESTAT-KOL.
Before the CESTAT, the appellants submitted that the CBEC after noting the decision of the Tribunal in the case of Balasore Alloys Ltd. (supra) came out with a Circular No. 134/3/2011-ST dated 08.04.2011 clarifying that wherever education cess has been refunded to the exporters along with service tax, by virtue of exemption from whole of service tax, the same need not be recovered. Support is also taken of the following decisions of Tribunal viz. Cauvery Coffee Traders - 2012-TIOL-1730-CESTAT-BANG and Kudremukh Iron Ore Co. Ltd. - 2012-TIOL-496-CESTAT-BANG.
The AR reiterated the findings of the lower appellate authority.
The CESTAT observed -
“7. …we find that the first appellate authority set aside the order-in-original which granted refund to the appellant by relying on the judgement of the Tribunal in the case of Balasore Alloys Ltd. (supra) which is in favour of the Revenue. We find that the first appellate authority has not considered the subsequent judgements passed by the Tribunal in the case of Cauvery Coffee Traders and Kudremukh Iron Ore Co. Ltd. (supra). It is also to be noted that the CBEC Circular No. 134/3/2011 dated 08.04.2011 was issued specifically noting the judgement of the Tribunal in the case of Balasore Alloys Ltd. (supra) and the Boards view is that education cess paid on the service tax by the service providers is also to be refunded to appellants. We find that the ratio of the judgement of the Tribunal in the case of Cauvery Coffee Traders and Kudremukh Iron Ore Co. Ltd. (supra) is the correct view as if the service tax liability is discharged on which education cess is paid on the goods exported, the benefit of refund of such education cess paid should not be denied when the export of goods is not in dispute.”
Holding that all the appellants are eligible for refund of education cess paid on the service tax by the service providers, the appeals were allowed with consequential relief.

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