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 CBEC clears some air on refunds under GST, central excise, service tax laws

Govt issues clarification on service tax refund for exporters
March, 13th 2009

The government has clarified that exporters will not get service tax refund on services consumed for export of goods before October 6, 2007.

Commerce Minister Kamal Nath announced the refund during the release of the annual supplement to the Foreign Trade Policy in April 2007. However, the notification in this regard was issued on October 6, 2007.

Being prospective in nature, refund is not admissible on such services received prior to the date they are notified in the said notification, even if the goods, in relation to which these services are used, are exported after the date when such services are notified under notification No. 41/2007-ST, a clarification by the Central Board of Excise and Customs (CBEC) said today. The CBEC administers all central indirect taxes in the country.

Exporters have protested the move. They are demanding that the benefit should be available for exports from the date it was announced in the Foreign Trade Policy. The government should announce refund of service tax on all eligible services, irrespective of their date of inclusion, from the date on which the said facility was notified in the Foreign Trade Policy, said A Sakthivel, president of the Federation of Indian Export Organisations (FIEO).

The notification also clarified that the claims for service tax refunds will have to be filed from the date of export of the consignment. Exporters have been demanding that claims should be permitted within six months of the date of export or date of realisation of the export proceeds, whichever is later. If export proceeds are realised after six months from the date of exports, such claims will be time barred under the present stipulation, added Sakthivel.

The clarification also provided for some relaxation of norms by allowing the refund of the gross service tax claim. Exporters had pointed that while handing over export remittances, banks used to deduct service tax. The government was not refunding this amount.

The latest CBEC clarification said: Refund is admissible on the basis of gross amount received for the exports and deductions made by the banks from export remittances, in lieu of services provided by bank, should not be deducted while granting refund.

Moreover, while claiming refunds, exporters will need to produce certified copies of various documents, rather than the original versions.

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