Tax officials are required to adopt the position already held on the same set of facts
Fact and issue of the case
The petitioner impugns the order dated 04 October 2021 passed by the second respondent and in terms of which its applications for refund of unutilized CENVAT credit have come to be negatived. The refund claims were lodged in respect of the quarters pertaining to October 2014 to December 2014, January 2015 to March 2015 and April 2015 to June 2015. These applications which were dated 29 September 2015, 23 December 2015 and 29 March 2016 respectively were made on the ground of the input services having been utilized by the petitioner in connection with ‘export of services‘. The services in question being Broadcasting, Business Support, IT Software and Management, Maintenance or Repair services.
As would be evident from the record, although the applications had been made on 29 September 2015, 23 December 2015 and 29 March 2016, the respondents chose to issue a first deficiency memo on 05 November 2019 followed by three other communications dated 13 May 2020, 19 May 2020 and 01 June 2020. According to the petitioner, its representatives were thereafter invited to several meetings in order to enable the respondents to ascertain the nature of services provided by the petitioner to its principal entity and to verify the claim for refund as made.
In terms of the impugned order dated 04 October 2021, the second respondent has come to conclude that the services rendered by the petitioner would not fall within the ambit of the expression ‘export of services‘ as contemplated under Rule 6A of the Service Tax Rules, 19941.
The second respondent holds that with respect to Broadcasting services, even though the ordering company was an entity based out of Mauritius, the customer operation details as provided would indicate beneficiaries of service being present in India and that even the satellite services offered by the petitioner being in respect of channels broadcasted in India. The second respondent holds against the petitioner additionally upon it coming to conclude that in terms of Section 2(105) of the Finance Act, 19942 read with Section 2(16), the services rendered to a Head Office would also imply services being provided to a Branch Office or representative in India and thus falling outside the net of ‘export of service‘ as contemplated under the Act and the 1994 Rules.
Insofar as services relating to Management, Maintenance and Repair were concerned, the second respondent has held that those would not fall within the ambit of ‘export of service‘ since the petitioner had failed to submit any agreement or invoice with respect to such services being provided to clients outside India. While dealing with IT Software Service, the second respondent negatived the claim for refund by observing that merely because the address of the customer is outside India, the same would not necessarily mean that those services had been exported out of the country.
Proceeding then to consider the Business Support Service component of the activities undertaken by the petitioner, the second respondent notes that while the petitioner had entered into an agreement with its parent company, the service itself was provided to international customers of the parent company or its group entities and that such customers were possibly present in India. It also took into consideration the fact that payment terms, as settled in favour of the petitioner, appeared to indicate that it was being paid on a commission and a cost-plus markup basis and that no invoices appear to have been raised upon the international customers. The second respondent in this respect held that the petitioner had in any case failed to place any invoices on record. It was on an overall consideration of the aforesaid aspects that the second respondent came to ultimately conclude that the service recipient was located in India and consequently the services rendered by the Petitioner would not qualify as an ‘export of service‘.
The second respondent went on to hold that the services rendered by the petitioner would in fact fall and qualify as ‘intermediary services‘ as defined under the Place of Provision of Services Rules, 20123, and for this reason also the applications for refund were liable to be rejected.
Observation of the court
We also find merit in the contention of Mr. Gulati, who had assailed the impugned order additionally on the basis of the refunds which had been duly granted for earlier periods. While it is true that the principles of res judicata may not be strictly applicable, we find that the nature and ambit of services which were rendered by the petitioner across separate assessment periods had remain unchanged. The respondents do not base their decision on any change in circumstance or differentiation in the spectrum of services that the petitioner undertook across different block assessment periods.
In this regard, it would be pertinent to recall that the Supreme Court in M/s Radhasoami Satsang had held that while each assessment year may constitute a unit in itself, unless a „fundamental aspect common to different assessment years has come to be altered’, the taxing authorities would be bound by the view already taken and it would in any case be impermissible for them to take contrarian views with respect to an identical set of facts.
As noticed hereinabove, the respondents while passing the impugned order have not alluded to any material change which may have justified a different or contrary view being taken. We thus find ourselves unable to sustain the impugned order on this additional ground. H. THE ALTERNATIVE REMEDY OBJECTION
Insofar as the argument of the respondent based on an alternative remedy is concerned, the same is noticed only to be rejected since we have already found that the action which had been initiated was in gross violation of the principles of natural justice. Undisputedly, a violation of the principles of natural justice constitutes an exception to the self-imposed restraint which we exercise when called upon to invoke our constitutional powers conferred by Article 226 of the Constitution. In addition, we have also found that the second respondent while considering the claim for refund has clearly acted in excess of the jurisdiction which could have been exercised. On this score also, we find no merit in the objection as taken by the respondents. I.
Accordingly, and for all the aforesaid reasons, the writ petition shall stand allowed. The impugned order dated 04 October 2021 is hereby quashed and set aside. The respondents shall as a consequence of the above, process the claim as submitted by the petitioner and effect refunds in accordance with law.
1 1994 Rules
2 the Act
3 PoPS Rules
4 CCR Rules
5 Excise Act
6 (2019) 17 SCC 46
7 (2000) 6 SCC 650
8 (2005) 10 SCC 433
9 2020 SCC Online Del 2606
11 (2014) 9 SCC 105
12 (1992) 1 SCC 659
13 2017 SCC Online Del 10299
14 the Board
15 2017 SCC Online Guj 2596
16 Customs Act
Read the full order from hereBT-India-Private-Limited-Vs-Union-of-India-Delhi-High-Court2