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2023 (6) TMI 499 - AT - Service TaxRefund claim - rejection of the application being pre-mature - consulting Engineers Services - export of services - services rendered by M/s Essar Engineering Ltd. were consumed outside the India - whether the refund claim filed by the appellant could have been returned as premature, when in fact, it was complete in all aspects and no further compliance was lacking at the Appellant’s end? - HELD THAT:- Section 35(1) of Central Excise Act, 1944 provides for filing appeals before Commissioner (Appeals). This section states that any person aggrieved by any decision or order passed under this Act by a Central Excise officer may appeal to the Commissioner (Appeals). The words used are ‘decision’ or ‘order’. In many judgments, the Tribunal as well as Hon’ble High Courts have held that a letter issued informing the decision which affects the right of the assessee can be considered as an appealable order. In the cases of INSTANT CLEARING SERVICES (I) PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS, CHENNAI [2015 (10) TMI 97 - CESTAT CHENNAI], M/S MANDVI CASTING PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [2011 (4) TMI 577 - CESTAT, MUMBAI] and BHAGWATI GASES LTD. VERSUS COMMISSIONER OF C. EX., JAIPUR-I [2008 (1) TMI 712 - CESTAT, NEW DELHI] the instances were communications issued by department and the issue for consideration was that can such comunications constitute an appealable order or not. It was held that when such communication/letter affects the right of assessee/party then appeal was maintainable. Once an application of refund has been filed before the refund sanctioning authority, the said authority is duty bound to decide the refund application one way or the other. The refund application can either be rejected or allowed in part or in full. The provisions of refund do not give liberty to the fund sanctioning authority to return the refund application by terming the same to be premature. Therefore the action of the Asstt. Commissioner in holding the application as premature is really an act of refusal to exercise a statutory duty to decide upon the refund application one way or the other. For this reason also, the order of the lower authority is untenable. The grounds for refund have not been considered by both the authorities nor the judgments relied upon by the appellant considered by both the authorities, nor there is any finding distinguishing the same. Thus clearly, there is serious violation of principles of natural justice apparent on the fact of record - if the tax itself is not leviable, it would be immaterial whether the payment for the services is received in Indian Currency or foreign currency. When the services in question were not taxable at all, as they were consumed outside India, the refund claim could not have been returned as premature on the ground that payment for the services were to be received in foreign exchange by M/s EPIL on a future date. Therefore the impugned order–in-appeal passed by the Ld. Commissioner in the present matter legally not correct. It is on records that the identified service element has been wholly rendered and consumed abroad. As Hon’ble Supreme Court in the case of ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES LTD. VERSUS DIRECTOR OF INCOME-TAX [2007 (1) TMI 91 - SUPREME COURT] held that in respect of offshore services, there should be sufficient nexus between the rendition of services and territorial limits of India. It was held that applying the principle of apportionment to composite transactions which have some operation in one territory and same in other, it is essential to determine taxability of the service operations. Applying this principle, in the present case the whole of service rendered and consumed outside India is beyond the taxable territory as per Finance Act, 1994, hence not liable to service tax. In the present case, the department and both the adjudicating authority nowhere disputed the facts that the services rendered by Appellant to ESML were provided and consumed at a place outside India and therefore, not leviable to Service tax, as the services was provided beyond the territorial jurisdiction of India. Thus, in the instant case, the amount deposited by the appellants without any authority of law cannot be considered as Service Tax. Therefore, the appellant are entitled to get the refund. There are no merits in the impugned order passed by the Learned Commissioner (Appeals) - appeal allowed.
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