Service Tax - Refund - Software exporters' woes continue - Department's appeal in High Court allowed and matter remanded
WHEN the software exporters started filing refund claims of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004, department did everything it could to reject the claims. Some of the grounds for rejection were - the output service exported is not taxable, there is no nexus between the input service and the output service, the claims are barred by limitation etc. So almost all the exporters got notices and the claims were rejected. When the matter reached the Tribunal, considering the long list of appeals, the Tribunal passed a detailed order on common issues involved vide Interim Order 2014-TIOL-1836-CESTAT-BANG.
Based on the findings of the Interim Order, the Tribunal disposed of an appeal finally (one among the 192) and the Department filed appeal against this final order of Tribunal on the ground that the practice followed by the Tribunal (of passing an Interim order and relying on the same in final order) is unknown in the field of law. The High Court agreed with the objection by the department and remanded the matter to the Tribunal with a direction to pass a speaking order.
Now, perhaps the Tribunal has to reproduce all the relevant findings from the Interim Order and pass a speaking order. There are nearly 192 appeals and the process may consume some tons of paper and considering the cost of dispatch and the time of Tribunal, finally the revenue may end up spending more money than it gained in the process. Why can't the department gracefully accept the order of Tribunal and allow refunds? Do they think that 192 software exporters, including the likes of Microsoft and Infosys indulge in claiming unlawful refund claims? If the practice followed by the Tribunal is unheard of, so is the attitude of the department towards the exporters.
Revenue has won on a technical point of law, but has lost badly on its avowed policy of "ease of doing business."