Service Tax - Commission and Export of Service

Both conditions are satisfied first service provided out of india and second payment recd in foreign currency so you can take input credit of service  tax which you charged on reversal basis.

Service tax is payable by you. You are rightly charging service tax. Please deposit.

I defer with the clarification awarded on the subject

Your services qualify as export of services as you are complying the conditions

Condition one : at the time of receipt of service the recepient is outside India

Condition two: Remittance is made in FE to your account

Condition three: The service must be used outside India 

you can be more competitive by not charging service tax, as you are not required to charge. Instead you can ask for an Increase of 5%. as the European client will still  benefit from 5.3% cost.

Infact you can also seek refund of service tax paid by you on your input services received for rendering these services.

I am sure other experts would agree on the clarification.

Mr. Dayal, I agree with your contention. However the Department feels otherwise. During my job I have faced the same problem. The Departments point of view is that service is being provided in India and as such service tax is chargeable. I will appreciate if you can quote some ruling that ST is not chargeable in such a case.

This judgement is relevant to the fact explained by me

M/s FANUC INDIA PVT LTD

Vs

CCE & ST, BANGALORE

Date of Decision: 20.10.2010

Appellant Rep by: Shri B Venugopal, Adv.
Respondents Rep by: Shri D P Nagendra Kumar, JCDR

CORAM: M V Ravindran, Member (J)
P Karthikeyan, Member (T)

Service Tax - BAS - Export of Services - Marketing and Sales promotion for foreign company in India is export - no tax- pre-deposit waived

This was a frutiful discussion

May i ask the experts how to claim refund of cenvat credit in this case. Will it be through Rule 5 of Cenvat Credit Rules 2005. Are the claims to be filed quarterly or monthly. Any limitation period for filing such refund claims.

Regards,

Rule 5 of Cenvat Credit Rules, 2004 provides that accumulated credit of inputs and input services which are used for providing output services or output goods, can be refunded to the exporter subject to stipulated conditions

In the instance case it is not a case of unutilised Cenvat refund, but rebate against services exported by charging service tax

Therefore Rule 5 is not to  be pursued.

However  Rule 5 of Export of services rules to be pursued and get the refund from the department. { the list of documents is enlisted below} 

Reference : Notification No :  11/2005-S.T. Dated :  19/04/2005 

Regarding limitations : the claim for refund shall be filed within one year from the date of export [Ref : Not no 17/2009 dated 07/07/2009

Following is the procedure to be followed where export is under claim for rebate which can be made

Refund Claim of service tax [extract of Not. No 11/2005]

Procedure:-

(a) Presentation of claim for rebate:-
 

(i) claim of rebate of service tax and cess paid on all taxable services exported shall be filed with the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be in FORM ASTR-1

(ii) such application shall be accompanied by,–
a. documentary evidence of receipt of payment against taxable service exported and for which rebate is claimed, payment of service tax and cess on such taxable service exported;
 

b. a declaration that such taxable service, rebate of service tax and cess paid on such service is claimed, has been exported, in terms of rule 3 of the said rules, along with the documents evidencing the export of such taxable service;
 

(b) The jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, if satisfied that the claim is in order, shall sanction the rebate either in whole or in part.
 

Explanation, - "service tax and cess" for the purposes of this notification means, -
(a) service tax leviable under section 66 of the Finance Act, 1994; and
(b) education cess on taxable services levied under section 91 read with section 95 of the Finance (No. 2) Act, 2004 (23 of 2004).
 

The list is illustrative only and the refund sanctioning authority may call for any other documents to satisfy about correctness of refund claim as per clause 6 above.

Hope you all will find the above information useful.