Service tax refund related notifications


Dear Friends

Here comes an article attempting to give a brief gist of various notifications notified for the purpose of refund of service tax.The article may appear to be very lengthy but I hope it covers every important aspect of the relevant notification. Lets get started:

Particular

Notification No.41/2012

Notification No.12/2013

Notification No.39/2012

Notification No.27/2012

Date of applicability

01/07/2012

01/07/2013

01/07/2012

01/07/2012

Superseding  which notification

52/2011 (S.T.) dt 30.12.2011

40/2012 (S.T) dt 20/06/2012

Not applicable

05/2006(C.E) dt 04.03.2006

Empowering Section/Rules

93(A) of Finance Act,1994

Section 93(1) of Finance Act,1994

Rule 6A of Service tax Rules,1994

Rule 5 of Cenvat Credit Rules,2004

For Whom the notification is meant

Exporter of Goods

SEZ Unit/SEZ Developer

Provider of services exported in terms of Rule 6A

Manufacturer who exports goods without payment of duty or a service provider who exports services without payment of service tax

What the notification reads

a. Allows rebate of service tax paid

b. On specified  services

c. Received by an exporter of goods

d. Used for export of goods

a. Allows rebate/ab-initio exemption  of service tax paid/to be paid

b. On taxable services

c. Received by SEZ unit/SEZ developer

d. Used for authorized operations

a. Allows rebate of duty paid on inputs and service tax paid on input services

b. Used in providing services that are exported as per rule6A

c. To any country other than Nepal & Bhutan

a. Allows refund of Cenvat Credit availed on inputs and input services

b. Used by manufacturer who export final /intermediate goods

c. Used by provider of output services who exports services as per Rule 6A of ST Rules

Other important terms related to the notification

Specified services means

a. In case of excisable goods –taxable services used beyond the place of removal for export of goods

b. In case of other goods-taxable services used for export of said goods

Place of Removal means

a. Factory of manufacturer

b. Or a warehouse /any other place where excisable goods are stored  without payment of duty

c. Or a depot, premises of consignment agent or any other premises-from where goods are sold after clearance from the factory

Export of service as per Rule 6A means

a. The provider of service is located in taxable territory

b. The receiver is located outside India

c. The service is not an exempted service or a negative list service

d. The place of provision of service is outside India

e. payment has been received in convertible foreign exchange

Amount of refund of Cenvat Credit

A/B*C

Where

A = (Export turnover of goods + Export turnover of services)

B = Total Turnover

C = Net CENVAT Credit

Net CENVAT Credit means

Total  CENVAT credit on inputs and input services reduced by the amount reverse as per Rule  3(5C)

Steps to claim Rebate

Rebate can be claimed either on the basis of rates specified in schedule annexed to the notification (para 2 method) or on the basis of documents submitted (para 3 method)

Either rebate can be claimed of service tax paid on specified services or an exemption ab-initio can be availed of service tax to be paid on specified services

Rebate is claimed  on the basis of documents submitted for the duty paid on inputs and service tax paid on input services received and used

A refund application needs to be submitted to the Assistant Commissioner or deputy Commissioner of Central Excise

Conditions to be fulfilled

a. Rebate shall be claimed only as per one of the method mentioned above

b. Rebate as per documents method (para 3) shall not be claimed where the difference between the amount of rebate calculated as per Para2 and para 3 is less than  20%  of the rebate available as per para 2

c. No CENVAT credit of service tax paid on specified services taken

d. The rebate shall not be claimed by a  unit or developer of SEZ

e. Where any rebate is allowed,  but the sale proceeds in respect of goods exported is not received within the RBI prescribed time limit, then the rebate granted earlier shall be recovered

a. The refund shall be available only of those specified services which are exclusively used for authorized operations of SEZ Unit/Developer

b. Proper accounts of receipt and use of specified services  to be maintained

c. Where any amount of service tax paid is erroneously refunded, the same shall be recovered under the provisions of the ACT

d. The SEZ unit/developed has the option not to avail this exemption and instead take CENVAT credit on specified services

a. The services are exported  in term of Rule 6A

b. The duty /service tax rebate of which is claimed has been paid to supplier or provider of service

c. The total amount of rebate is not less than 1000/-

d. No CENVAT  credit has been availed on inputs services on which rebate claimed

e. In case, any of the above condition is not satisfies, the rebate if any paid shall be recovered with interest

a. One claim of refund is allowed for each quarter

b. The value of goods cleared for export should match with the value specified in quarterly return filed by the claimant

c. The amount of refund claimed shall not be more than the amount lying in books of the claimant

d. The amount claimed as rebate shall be debited from the CENVAT credit account

e. In case refund sanctioned is less than refund claimed, then  credit of the difference can be taken

Procedure for filing refund claim

As per Para 2

1. The Manufacturer Exporter /Exporter registered under service tax should register his bank account number with the customs.

2. Declaration to be made by exporter in the shipping bill/Bill of export that-

- Rebate shall be claimed as a % of the FOB value of goods exported and

- No rebate shall be claimed under para 3

- All condition of notification satisfied.

3. The amount of rebate shall be deposited in exporters bank account

4. No refund where the amount of refund is less than 50/-

As per Para 3

1. Rebate is claimed of service tax actually paid on the basis of duly certified documents.

2. A manufacturer-exporter shall file the refund claim with the AC/DC of Central excise in form A-1has jurisdiction on his factory.

3. A exporter registered under ST shall file the refund claim in form A-1 with the AC/DC of CE who has jurisdiction over his registered office /head office.

4. Time period of filing rebate claim-within 1 year from the date of export of the said goods.

5.Where the amount of rebate is upto 0.50% of the FOB value of goods exported-

Form A1 shall be submitted along with

- Invoice, bill or challan of each specified service used

- Evidencing the payment of the specified service  and the service tax thereon

The above documents need to be self certified by the exporter in case of proprietorship concern or partnership firm.

In case exporter is a limited company any person authorized by the board can certify the documents.

Also, where the amount of rebate is more than 0.50% of the FOB value of goods exported-

The certification needs to be done by a Chartered Accountant.

6. The refund claim shall be sanctioned within one month from the receipt of said claims if all the documents are found to be in place.

In case of ab-initio exemption

1. The SEZ unit/developer approaches the Approval committee to get an approval of list of services to be used for authorized operations.

2. A declaration in Form A-1 verified by specified officer of SEZ is submitted to the AC/DC of Central excise along with a list of services

3. On basis of declaration a authorization is issued in form A-2

4. A copy of authorization is provided to each service provider  to get the service without payment of service tax

5. A quarterly statement if Form A-3 to be filed providing details of services received without payment of service tax

6. In case the specified service is not exclusively used for authorized operation than the amount of service tax not paid earlier shall be paid to the government along with interest.

In case of Refund Claim

Refund claim can be filed when the specified service is not exclusively used for authorized operations or where the exemption is not availed. The claim can be filed as below:

1. Service tax paid on specified services that are common to SEZ operations as well as DTA operations, shall be divided in manner prescribed in Rule 7 of CCR.

2. SEZ unit shall get refund of its above part along with service  tax paid due to non-availment of exemption .

3. Refund claim to be file in Form A-4 with the AC/DC of Central Excise.

4. Time period of filing rebate claim-within 1 year from end of the month in which service tax paid.

5. Only one refund claim for each quarter.

Step1:Filing of Declaration  with the AC/DC of Central Excise before the date of export of service

Contents of Declation

a. Specifying services to be exported along with

b.Description,quantity,value ,rate of duty and amount of duty payable of inputs used in providing the exported services  and

c. Description ,value,amout of service tax & cess payable on input services used  in providing the exported services

Step 2: Verification Of Declaration

The AC/DC may call upon relevant information to satisfy itself that there is no likelihood of any evasion of duty or service tax and cess thereon.He may accept the declaration.

Step3:Procurement  of inputs/input services

The provider of servies to be exported shall

- Procure inputs under the cover of an invoice issued under Central Excise Rules,2002 from registered factory of manufacturer or a registered dealer

- Also he shall receive required input services under the cover of an invoice,bill or challan as issued under the Service tax Rules,1994

Step4:Presentation of Rebate Claim

1. The rebate claim shall be filed after the services are exported

2. Rebate application shall be accompanied by

a. Invoice for inputs used+invoice for input services used

b. Evidence of payment of duty of excise and service tax thereon above invoices

c. Evidence of receipt of payment of service exported

d. A declaration to the effect that services has been exported in terms of Rule 6A along with documents evidencing such exports

3.The AC/DC shall grant the rebate in full or on part.

4. Time period of filing rebate claim: there is no time limit for filing the claim or for sanctioning of claim.

1.Application in Form-A to be submitted to the AC/DC of CE  by the manufacturer or the provider of service

2. The refund application shall be signed by

- Individual or the proprietor in case of proprietorship firm

- Karta in case of HUF

- Partner in case of Partnership Firm

- Person authorized by the Board Of Director in case of Limited Company

3.Copies of bank realization certificate in respect of service exported to be attached with the application.

4. . Time period of filing rebate claim:As prescribed in Section 11B of the Central Excise Act i.e . within one year from the date of receipt of export consideration.

5.Certificate in Annexure A-1 ,duly signed by the auditor certifying correctness of refund claimed in respect of export of service.

6.The AC/DC may call for any further information as required by him before sanctioning the refund claim.

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Annu Agarwal 
on 06 December 2014
Published in Service Tax
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