GST DEPT. SERVICE EXPORT

Dear Sir

We seek your guideline

We are manufacturer cum Merchantise star export house. Some remote maintenance support service was provided to foreign client to whom we had supplied machinery under a different PO / Invoice.

As we receive forex against services element. GST Dept asks for e-FIRC but AD says that FIRC is stopped long back and e-FIRC is meant for FII/ FDI.

GST Dept disallows exempt Supply from turnover and issues SCN asking fine / penalty.

For service, where is tax credit part unlike equipment export. We are not IT company.

Is our service coming under definition of service export? If Banks refuse per RBI guideline, then how to convince GST Dept

Regards

Jayanta Bandyopadhyay

Kolkata

Hi Jayanta,

This is a common issue many exporters face regarding export of services and the RBI/FIRC documentation.

Key points:

Export of Services under GST:
- Export of services means supply of service where the supplier is in India, the recipient is outside India, place of supply is outside India, payment is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI.
- Your remote maintenance support service to foreign client qualifies as export of service if these conditions are met.
FIRC/e-FIRC Issue:
- RBI has phased out issuance of physical FIRC certificates for many transactions.
- e-FIRC is now generally available through banks for specific transactions like FDI/FII but many exporters do not get physical or electronic FIRC for export of services.
- Banks issue export realization certificates or statements confirming receipt of foreign exchange, but may not call it FIRC/e-FIRC.
GST Department Demanding e-FIRC:
- GST department is asking for e-FIRC to confirm export receipts.
- Banks denying FIRC for services as per RBI guidelines is a known issue.
How to respond and convince GST department?
- Show bank statement/ SWIFT remittance advices / export realization certificate / exchange realization report issued by bank which confirm receipt of forex.
- Provide a declaration or certificate from your bank regarding non-issuance of FIRC for export of services as per RBI/FEMA guidelines.
- Cite RBI circulars/guidelines that physical FIRC not mandatory for export of services.
- Attach the export invoices, contracts, payment proofs clearly showing services supplied and forex received.
- Explain the legal definition of export of service under GST and RBI guidelines to justify exempt treatment.
Regarding ITC:
- Export of services is treated as zero-rated supply under GST.
- You can claim ITC on inputs and input services used in providing export of service.
- However, since you are not an IT company, your service export does not attract GST, but you still qualify for zero-rated export benefits and refund of ITC.

Summary suggestion for reply:

Confirm service qualifies as export under GST (exempt/zero-rated).
Provide alternate forex realization proof in absence of e-FIRC.
Reference RBI/FEMA notifications exempting FIRC for service exports.
Request GST department to consider the alternate proofs and release penalties/fines.
Highlight that denying exempt supply from turnover is not justified as per law.