Rebate Claims for Exported Telecom Services Allowed Despite Missing Original Documents
Summary in Key Points:
- Issue: Whether the rejection of rebate claims for exported telecom services was justified due to the non-submission of original documents, which were lost during inter-departmental transfer within the revenue department.
- Facts: The petitioner, a telecom service provider, claimed rebates for service tax paid on exported services. The revenue department rejected the claims due to the non-submission of original documents, which were lost during an inter-departmental transfer. The petitioner had repeatedly submitted photocopies and explained their inability to provide the originals.
- Decision: The CESTAT held that the rejection of rebate claims was unjustified, as the loss of original documents was due to the department’s inefficiency, and the petitioner could not be penalized for it. The court quashed the rejection order and directed the department to consider the claims based on the available evidence.
Decision:
The CESTAT ruled in favor of the assessee, setting aside the order rejecting the rebate claims. The CESTAT emphasized the following:
- Departmental Inefficiency: The loss of original documents occurred due to the revenue department’s inefficiency during the transfer of records.
- Unjust Rejection: Rejecting the rebate claims solely based on the missing original documents was unjust, especially when the petitioner had submitted photocopies and other supporting evidence.
- Assessee’s Willingness to Comply: The assessee was willing to provide all available documents and should not be penalized for the department’s procedural lapses.
- Entitlement to Rebate: If the assessee is legally entitled to the rebate, the revenue department cannot deny it based on the absence of original documents, especially when the loss was caused by the department itself.
Important Note: This case highlights the importance of fairness and reasonableness in the administration of tax laws. The CESTAT’s decision emphasizes that taxpayers should not be penalized for procedural lapses on the part of the revenue department. It also underscores the principle that if an assessee is legally entitled to a benefit, it should not be denied due to technicalities or circumstances beyond their control.
HIGH COURT OF GUJARAT
Vodafone Idea Ltd.
v.
Union of India
BHARGAV D. KARIA and D.N. Ray, JJ.
R/SPECIAL CIVIL APPLICATION NO. 21525 of 2019
JANUARY 2, 2025
Anand Nainawati for the Petitioner. C.B. Gupta and Devang Vyas for the Respondent.
JUDGMENT
Bhargav D. Karia, J.- Heard learned advocate Mr. Anand Nainawati for the petitioner and learned advocate Mr. C.B. Gupta for respondent Nos.2 and 3. Learned ASG Mr. Devang Vyas was appearing earlier in the year 2019, but in place, now no one appears and no one has bothered to file appearance for respondent No.1 Union of India.
2. Rule. Learned advocate Mr. C.B. Gupta waives service of notice of rule on behalf of respondent Nos.2 and 3.
3. By this petition under Articles 226 and 300A of the Constitution of India, the petitioner has prayed for the following reliefs:
“44(a) Your Lordships be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari under Article 226 of the Constitution of India, calling for the records pertaining to the impugned Order-In-Original No. CGST/WS08/Ref-06/ST/ BSM/19-20 dated 13 August 2019 and after going into the validity and legality thereof to quash and set aside the same;
(b) Your Lordships be pleased to issue writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus ordering and directing the Respondents, their subordinate, servants and agents to forthwith:
| (i) | withdraw and/or cancel impugned Order-In-Original No. CGST/WS08/Ref-06/ST/ BSM/19-20 dated 13 August 2019; |
| (ii) | sanction the rebate claim of Rs.11,54,82,738/- as filed by the Petitioner along with interest. |
(c) Pending the hearing and final disposal of this Petition, Your Lordships be pleased to direct the Respondents by an interim order of this Hon’ble Court to forthwith deposit an amount of Rs.11,54,82,738/- in this Hon’ble Court with a liberty to the Petitioner to withdraw the same, without prejudice to the Petitioner’s right of refund of the actual amount along with appropriate interest;
(d) An ex-parte ad-interim relief in terms of prayer (c) above may kindly be granted;
(e) Such other and further order or orders as may be deemed just and proper in the facts and circumstances of the present case may kindly be granted.”
4. The brief facts of the case are as under:
| (i) | The petitioner company was holding Service Tax Registration with the Commissioner of Service Tax, Division-II, Range XX, Commissionerate Delhi, being No. AAACS4457QST001. |
| (ii) | With effect from 12th February 2016, the petitioner obtained Centralized Registration for its premises located at Ahmedabad, falling within the jurisdiction of respondent No.2 – Principal Commissioner of CGST, being No. AAACS4457QST001. |
| (iii) | The petitioner is engaged in the business of providing telecom services categorized under the category of ‘Telecommunication Services’. |
| (iv) | In order to provide telecommunication services to its subscribers located outside India, Foreign Telecom Operators (FTOs) entered into an agreement with a telecom operator located in their jurisdiction who extends the roaming facility to the subscribers of the FTO so as to ensure seamless supply of services to their subscribers located outside India. The petitioner, therefore, in normal course of business, entered into an agreement with various FTOs having their permanent establishment outside India and having their establishment and business operations outside India. |
| (v) | The petitioner initially paid service tax on the gross invoice value of the service exported to the FTOs located outside India and thereafter claimed rebate of the same as provided under Rule 5 of the Export Rules read with Notification No.11 of 2005 dated 19th April 2005. The petitioner accordingly filed 7 rebate claims with the Delhi Commissionerate in Form ASTR-1, the details of which are as under: |
| Sr. No. | Period | Amount (Rs.) | Date of filing rebate claim |
| 1 | August 2006 to March 2007 (Rebate Claim 1) | 6,34,27,140 | 09.11.2011 |
| 2 | October 2010 to March 2011 (Rebate Claim 2) | 3,90,74,456 | 30.09.2011 |
| 3 | April 2011 to September 2011 (Rebate Claim 3) | 1,24,53,886 | 28.03.2012 |
| 4 | July 2011 (Rebate Claim 4) | 20,515 | 08.02.2013 |
| 5 | October 2011 (Rebate Claim 5) | 1,09,086 | 09.05.2013 |
| 6 | October 2011 to March 2012 (Rebate Claim 6) | 2,52,657 | 26.06.2012 |
| 7 | February 2013 (Rebate Claim 7) | 1,44,998 | 05.03.2014 |
| 11,54,82,738 |
| (vi) | Along with the rebate claims, the petitioner submitted the following documents: |
| (i) | Details of invoices raised (i.e. Register for output services) on our clients for services exported. |
| (ii) | Copy of Export invoices (output service invoice) along with Foreign Inward Remittance (FIRCs). |
| (iii) | Along with the Rebate Claim 1, 2, 3 and 6, the petitioner has also submitted ST-3 returns for the relevant period. |
| (iv) | Along with the Rebate Claim 1, 2, 3, 4, 5 and 6, the petitioner has also submitted TR-6/GAR-7 challan evidencing payment of service tax. |
| (vii) | It is the case of the petitioner that the Assistant Commissioner of Service Tax, Refund (Division VI), Delhi-II issued deficiency letters in respect of rebate claim Nos. 1, 2, 3 and 6 which were replied by the petitioner in the year 2015 by supplying the documents requested in the deficiency letters. |
| (viii) | The Assistant / Deputy Commissioner of Service Tax, Refund (Division VI), Delhi-II passed 7 separate orders rejecting the rebate claims filed by the petitioner on 24th June 2015. |
| (ix) | Being aggrieved, the petitioner preferred appeals before the Commissioner (Appeals-I), New Delhi. The petitioner was granted personal hearing on 22nd February 2016 by the Commissioner (Appeals-I), New Delhi. The petitioner, in the meantime, had obtained Centralized Service Tax Registration within the jurisdiction of respondent No.2 with effect from 13th February 2016 and therefore, a request was made by the petitioner to transfer the appeal papers to the office of Commissioner (Appeals), Ahmedabad, which ought to have exercised jurisdiction over the petitioner on 22nd February 2016. |
| (x) | The request made by the petitioner to transfer the files from New Delhi to Ahmedabad was accepted and accordingly the appeal papers were transferred to the office of Commissioner (Appeals), Ahmedabad. |
| (xi) | The petitioner was thereafter granted personal hearing on 21st July 2016. The authorized representative of the petitioner attended the personal hearing and reproduced photocopies of the documents submitted at the time of filing of rebate claims containing total of 26 box files. |
| (xii) | The Commissioner (Appeals), Ahmedabad, vide order dated 22nd July 2016, remanded the matter back to respondent No.3 – Assistant Commissioner of CGST, Division-VIII (Vejalpur), Ahmedabad (South) to decide the case afresh after following the principles of natural justice. |
| (xiii) | The petitioner, therefore, requested respondent No.3 by letter dated 30th August 2016 to adjudicate the rebate claims on the basis of the documents submitted by the petitioner at the time of filing of the rebate claims. However, respondent No.3 informed the petitioner that all the documents with respect to 7 rebate claims filed by the petitioner were not available with the office of respondent No.3. The petitioner, therefore, by letter dated 28th October 2016, re-submitted the following documents: |
| (i) | List of rebate claims filed by the petitioner. |
| (ii) | Copies of all invoices and FIRCs pertaining to Rebate Claim 2 and 3. |
| (iii) | Copies of Orders-in-Original passed by the Assistant / Deputy Commissioner of Service Tax, Refund (Division VI), Delhi-II. |
| (xiv) | The petitioner thereafter, by letter dated 3rd February 2017, once again requested respondent No.3 to adjudicate the rebate claims on the basis of documents submitted by the petitioner. |
| (xv) | It appears that the office of the Assistant / Deputy Commissioner of Service Tax, Refund (Division VI), Delhi-II, vide letter dated 19th January 2017, had informed respondent No.3 that the documents of rebate claims of the petitioner were sent by Speed Post, however, the same were never received by the office of respondent No.3. |
| (xvi) | Thereafter, respondent No.3, vide letter dated 20th February 2017, requested the petitioner to submit the original documents pertaining to rebate claims and refused to accept the photocopies of original documents submitted by the petitioner and further instructed the petitioner to liaise with the office of Assistant / Deputy Commissioner of Service Tax, Refund (Division VI), Delhi-II and get the documents to be transferred by the office of respondent No.3. |
| (xvii) | Therefore, the petitioner, vide letter dated 21st March 2017, informed respondent No.3 that it has already submitted all the supporting documents along with the rebate claims and requested respondent No.3 to pass the order on the basis of documents re-submitted by the petitioner. |
| (xviii) | Respondent No.3, however, without taking into consideration the request of the petitioner, by order dated 9th May 2017, rejected all the 7 rebate claims filed by the petitioner on the ground that original files of the rebate claims submitted by the petitioner were not received from the office of the Assistant / Deputy Commissioner of Service Tax, Refund (Division VI), Delhi-II. |
| (xix) | Being aggrieved by Order-in-Original, the petitioner filed an appeal before the Commissioner (Appeals), Ahmedabad, who, by order dated 29th January 2018, remanded the matter back to the Adjudicating Authority to decide the case afresh after following principles of natural justice. The Commissioner (Appeals), while remanding the matter back to respondent No.3, held as under: |
“7. I have carefully gone through the facts of the case on records, grounds of appeal in the Appeal Memorandum and oral submissions made by the appellants at the time of personal hearing. Various citations and written submission submitted at the time of personal hearing, I find that the claims were rejected on the ground of limitation without going into the merit. Though in discussion at para 7.5 to 7.10 of the impugned OIO the adjudicating authority has discussed that the original documents are not received from Service Tax Delhi, and without going into the merits the matter is being decided.
8. Regarding the issue of rejection of the claims i.e. on the ground of limitation, the applicability of Section 11B of the Central Excise Act, 1944 was not properly discussed in the impugned order. There are several judgments for and against the applicability of limitation on the claim of rebate which need to be discussed properly. Without verification of the documents the matter has been decided very vaguely as time barred. Further it is observed that adjudicating authority has decided the case in remand in a very casual approach i.e. seven OIA’s remanded has been decided vide single order, which is an astonishing act.
9. Regarding the issue of non-submission of required documents, the adjudicating authority has not properly discussed the same. The appellants have stated that they have submitted all the required documents along with the rebate claims. I believe that this issue needs to be properly verified by the present adjudicating authority. It is evident that the adjudicating authority has made efforts to get the record transferred from the Service Tax Delhi, but simply quoting that the Service Tax Delhi has sent the records by speed post to “assistant Commissioner Gujarat“, but not received by them does not conclude that the records are not available or not filed by the appellant. It is also fact that the records were submitted to proper authority at Delhi, to transfer the same is not the responsibility of the appellant but of the department. It is needless to say that sincere efforts could have resulted in finding the records; it is quite unbelievable that the records sent through Speed Post are not traceable. It is directed to take up the matter with proper authority if required with higher authority of the department at Delhi, and with postal departmental to trace the consignment of speed post. Simultaneously on the basis of documents submitted by the appellants adjudicating authority should examine from legal point of view/merit of eligibility of rebate, it is also directed to the appellant to give cooperation to the department for such purpose. Substantial rights of the assessee if any cannot be denied without verification and natural justice.
10. In light of the above discussion, I remand back the matter to the present adjudicating authority to decide the case afresh preferably within four weeks from the receipt of this order, following the principle of natural justice as per the discussion above.”
| (xx) | Pursuant to the above Order-in-Appeal dated 29th January 2018, respondent No.3, by letter dated 19th February 2019, called upon the petitioner to produce the original copies of all the documents to take appropriate decision in respect of the rebate claims. |
| (xxi) | In reply, the petitioner, by letter dated 6th March 2019, informed respondent No.3 that all requisite documents were already submitted at the time of filing of rebate claim and further by letter dated 28th October 2016, the petitioner had re-submitted copies of rebate claim for certain periods and also informed respondent No.3 that the Commissioner (Appeals), Ahmedabad had directed to decide the rebate claim on the basis of the documents submitted by the petitioner in the Order-in-Appeal. |
| (xxii) | It appears that respondent No.3, without following the directions issued by the Commissioner (Appeals) in the order dated 29th January 2018, once again requested the petitioner to provide original copies of all the documents by letter dated 7th March 2019. |
| (xxiii) | During the course of personal hearing on 11th April 2019, the authorized representative of the petitioner made additional submissions requesting respondent No.3 to consider the submissions already made during the adjudicating stage and pass the order accordingly without insisting for submissions of original copies as ordered by the Commissioner (Appeals), Ahmedabad. |
| (xxiv) | It is astonishing and surprising that respondent No.3 -Assistant Commissioner of CGST, Division-VIII (Vejalpur), Ahmedabad (South) in total disregard and ignoring the directions issued by the Commissioner (Appeals), Ahmedabad, passed the impugned order dated 13th August 2019 rejecting all 7 rebate claims filed by the petitioner in the absence of original documents submitted by the petitioner at the time of filing of rebate claim observing as under: |
“26. I also find that this office has been given 3 personal hearings to the assessee on 26.03.2019, 01.04.2019 & 10.04.2019 as a natural justice. Further, this office has also been requested the Assistant Commissioner, Service Tax, Div-VI, Delhi to provide original documents vide letter dated 05.09.2016 & several reminders dtd. 24.10.2016, 15.11.2016, 25.11.2016 & 13.01.2017. I find that Assistant Commissioner, Service Tax, Div-VI, Delhi was unable to provide the requested documents as per their letter F. No. CNDL-II/ST/Div-VI/MiscCorres/2015 letter dated 19.01.2017. As per the said letter it is also find that the concerned post office is also unable to provide the information/documents, since as per post office staff the complaint regarding non delivery of any item (files in this case) can be done within 45 days of the dispatch and records of the speed post are maintained for 6 months only. Therefore, there is no way to ascertain the status of the files by the post office also. Now tehre is no scope to find the required documents from the Service Tax, Delhi and or from the post office Delhi.
27. I find that the asssessee has submitted the photocopies of documents (26 box files) of 2 rebate claims out of 07 rebate claims i.e. for the claim of Rs.1,24,53,886/- for the period Apr 2011 to Sep 2011 (12 Box files) and for the claim of Rs.3,90,74,456/- for the period Oct 2010 to Mar 2011 (14 Box files) vide their letter dtd. 28.10.2016. On scrutiny of the said documents it is observed that there were only two types of documents i.e. Invoices and Foreign Inward Remittance Certificate (FIRC). These documents are not sufficient for rebate claim. The all essential documents like Export Invoices, Payment Proof, Cenvat Register/GAR-7/TR-6 Challans, FIRCs & Service Agreement/Contracts held with the Foreign Service Recipients etc. were not submitted by the assessee. On scrutiny of the said documents, it was found that there were certain deficiencies/ambiguities in respect of the conditions and procedures laid down in the Notification No. 11/2005-Service Tax dated 19.04.2005. The said assessee still failed to provide the other required essential documents. As the party has not submitted the essential documents, from which the nature of the services rendered exported by them could be ascertained, the nature of the party’s service is not ascertainable and as the nature of the output services is not ascertainable, ti is not possible to now whether these services qualify as ‘export’ under the Export of Service Tax Rules, 2005 or not. On verification of the said documents it is observed that the assessee i.e. M/s. Vodafone Idea Limited (previously known as M/s. Vodafone Mobile Services Limited) is not eligible for rebate of Rs.5,15,28,342/-, due to non availability of essential required documents as well as original documents. Accordingly, the said rebate claim cannot be sanctioned to the assessee.
28. I find that the assessee has submitted the original documents at Service Tax Office, Delhi which are required for sanctioning the rebate claim, but this office was unable to receive the original documents from the Service Tax Office, Delhi, as mentioned above. In absence of those ORIGINAL files which has been submitted by the said claimant to Service Tax, New Delhi, this office cannot proceed with the directions of the Hon’ble Commissioner (Appeals) with respect to the adjudication of these rebate claims.
29. Further, it is not out of place to mention here, that I pass the following order without going into merit of the case since this office do not have any original refund claim papers. In view of the above, I pass the following order.”
| (xxv) | The aforesaid observations made by respondent No.3 are contrary to the directions issued by the Commissioner (Appeals) in the order dated 29th January 2018 to the effect that respondent No.3 was supposed to examine the eligibility of the rebate claims filed by the petitioner on the basis of the documents submitted by the petitioner and the petitioner was also directed to render cooperation for such purpose. |
| (xxvi) | It appears that respondent No.3 never called upon the petitioner to provide documents as the original documents filed by the petitioner were not found or being transferred from Delhi as observed in para 26 of the impugned order. Respondent No.3, therefore, could not have rejected the claim only in the absence of original files which were submitted by the petitioner at Delhi to the Service Tax Department at Delhi. Such approach of respondent No.3 is in fragrant breach of the directions issued by the Commissioner (Appeals) to pass the eligibility of rebate claim filed by the petitioner in the year 2015. |
5. Learned advocate Mr. Anand Nainawati for the petitioner referred to the further affidavit filed by the petitioner so as to provide the list of documents to be filed before respondent No.3 for adjudication of rebate claims and submitted that the petitioner is having photocopies of following documents which can be submitted before respondent No.3:
| Period | Amount | Documents details |
| 2006-07 | 6,34,27,140/- | Copies of Invoice as available along with excel sheet of FIRC details |
| 2010-11 | 3,92,19,454/- | Copies of Invoice as available along with excel sheet of FIRC details |
| 2011-12 | 1,28,36,144/- | Copies of Invoice. Copies of FIRCs and excel sheet of FIRCs |
6. Referring to the above details, it was submitted that the petitioner shall submit such documents within stipulated time as may be prescribed by this Court so as to enable respondent No.3 to adjudicate the rebate claims filed by the petitioner.
7. On the other hand, learned advocate Mr. C.B. Gupta for respondent Nos.2 and 3 submitted that if the petitioner submits such documents within a period of four weeks, respondent No.3 shall decide the rebate claims filed by the petitioner within a reasonable time as may be prescribed by this Court. Learned advocate Mr. Gupta referred to the reply affidavit of the respondents dated 31st December 2024 on the following averments of the affidavit:
“4. That, the adjudicating authority, viz., Assistant Commissioner of Central GST, Division-VIII, Ahmedabad South, vide letter dated 19.02.2019, called for the original documents from the petitioner, to decide the matter. The petitioner, vide letter dated 06.03.2019, informed that original documents were submitted by them at the time of filing of Rebate Claim at Service Tax Delhi. On enquiry with the Service Tax, New Delhi Office, it was informed that the documents / records / files had already been dispatched by Speed Post on 04.03.2016 to Service Tax, Ahmedabad Office. However, the required documents / records / files were not received by the present adjudicating authority from the Service Tax, new Delhi office or from Kalkaji Post Office, Delhi.
5. That, the petitioner later on submitted the photocopies of documents (26 Box Files) of only 2 Rebate Claims, i.e., for Rebate Claim of Rs.1,24,53,886/- of April, 2011 to September, 2011 period (12 Box Files) and for Rebate Claim of Rs.3,90,74,456/- for October, 2010 to March, 2011 period (14 Box Files) before the present adjudicating authority, which contains only two types of documents i.e. Invoices and Foreign Inward Remittance Certificate (FIRC).
6. That, in order to decide the Rebate Claims, following documents are required:
| i. | Export Invoices |
| ii. | Payment Proof (CENVAT Register / TR-6 / GAR-7 Challans) |
| iii. | Foreign Inward Remittance Certificate (FIRC) |
| iv. | Service Agreement / Contracts held with the Foreign Service Recipients. |
7. That, the aforesaid documents are required to ensure that the conditions and limitation prescribed in Notification No.11/2005-Service Tax dated 19.04.2005 are fulfilled and to decide the Rebate claim. In absence of essential documents and the documents so far furnished by the petitioner do not suffice for ascertaining the nature of petitioner’s service and it is not possible to know whether these services qualify as ‘export’ under the Export of Service Tax Rules, 2005 or not.
8. That, 6 Rebate Claims were rejected by the Assistant Commissioner of Service Tax, Division-VI, Delhi-II Commissionerate on the ground of limitation under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. Therefore, those 6 Rebate Claims are subject to limitation provided under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994, on submission of essential documents.”
8. Referring to the aforesaid affidavit, it was submitted that the respondent authority shall carry out adjudication process in accordance with law on submission of essential documents by the petitioner.
9. Having heard learned advocates for the respective parties and considered the facts of the case, respondent No.3 has already pre-determined its mind to reject the rebate claims filed by the petitioner as stated in para 8 of the affidavit reproduced hereinabove on the ground of limitation under section 1B of the Central Excise Act, 1944.
10. The petitioner is ready and willing to provide all documents which are available after more than 10 years as there is no fault on the part of the petitioner for loss of documents by the respondent authority and if the petitioner is legally entitled to the rebate claim, the respondent authority cannot deny the same for want of documents, otherwise the petitioner proves the eligibility of such claim.
11. In view of the facts of the case, we are of the opinion that let the matter be examined by respondent No.2 – Principal Commissioner of CGST by adjudicating the rebate claims on the basis of documents to be submitted by the petitioner within a period of four weeks from today, instead of respondent No.3 for not following directions issued by the Commissioner (Appeals) as well as having pre-determined mind to reject the claim. Let respondent No.2 be adjudicated the rebate claims of the petitioner on the basis of the documents to be submitted by the petitioner within a period of twelve weeks from the date of receipt of such documents. The impugned Order-In-Original No. CGST/WS08/Ref-06/ST/ BSM/19-20 dated 13th August 2019 is hereby quashed and set aside. The petition is accordingly allowed. Rule is made absolute to the aforesaid extent. No order as to costs.