For exported services, refund limitation runs from receipt of foreign exchange.

Exactus Corporation (P) Ltd. filed two refund claims under Notification No. 39/2012-ST for service tax and cess paid on input services used in exporting services: ₹52,26,602 for July 2012–March 2013, filed on 21 January 2014, and ₹17,68,160 for April–September 2013, filed on 2 April 2014.

The Assistant Commissioner rejected both claims under Notification No. 39/2012-ST read with Section 11B of the Central Excise Act, 1944, as applicable to service tax through Section 83 of the Finance Act, 1994.

On appeal, the Commissioner (Appeals) held that the relevant date for limitation was the date of receipt of foreign exchange, or the date of invoice where payment had been received in advance, and allowed the refunds.

The Revenue challenged that order, contending that Notification No. 14/2016-CE (NT), which specified the relevant date, was prospective and could not apply to the earlier refund periods.

1. Whether the relevant date for computing the limitation period under Section 11B for refund of service tax paid on input services used in exported services is the date of receipt of foreign exchange, rather than the date of payment of tax or the export period concerned?

2. Whether Notification No. 14/2016-CE (NT) dated 1 March 2016 was merely clarificatory and could be relied upon for refund claims relating to periods before its issuance?

3. Whether the respondent’s refund claims were filed within the prescribed limitation period under Section 11B read with Notification No. 39/2012-ST?

The Tribunal applied Section 11B of the Central Excise Act, 1944, as made applicable to service tax by Section 83 of the Finance Act, 1994, which prescribes a one-year limitation period from the “relevant date” for refund claims.

It relied on Notification No. 39/2012-ST governing refunds of service tax paid on input services used in exported services.

The Tribunal followed Spec India v. Commissioner of Service Tax, Ahmedabad, 2016 (45) S.T.R. 472 (Tri.-Ahmd.), which held that Notification No. 14/2016-CE (NT) was clarificatory and that, for exported services, the relevant date is the date of receipt of foreign exchange.

It further relied on Bechtel India Pvt. Ltd., 2014 (34) S.T.R. 437 (Tri.-Del.), and Scionspire Consulting Services (I) Pvt. Ltd., 2017 (47) S.T.R. 188 (Tri.-Chennai), which similarly treated receipt of foreign exchange as the relevant date for refund limitation.

Rule 6(3A) of the Service Tax Rules was also considered for the principle that export is completed upon receipt of foreign exchange.

The Tribunal held that the legal position regarding the relevant date was not created for the first time by Notification No. 14/2016-CE (NT); the notification merely clarified the existing position.

The Revenue’s contention that the notification was prospective was rejected because the Revenue had not shown that the Spec India decision had been stayed by the Gujarat High Court merely because an appeal was pending.

Applying Rule 6(3A) and the decisions in Bechtel India and Scionspire Consulting Services, the Tribunal treated receipt of foreign exchange, evidenced by the FIRC, as the relevant date for determining limitation.

Since the refund claims were filed within one year from the applicable dates of receipt of foreign exchange, they satisfied Section 11B read with Notification No. 39/2012-ST.

It held that the relevant date for the refund claims was the date of receipt of foreign exchange and that Notification No. 14/2016-CE (NT) was clarificatory in nature.

The claims were therefore within limitation under Section 11B.

The Revenue’s appeal was dismissed and the Commissioner (Appeals)’s order allowing the refund claims was upheld.