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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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Publish Date: 28 Feb, 2011
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Changes in Service Tax Refund Scheme

Change in Service Tax Refund Scheme

Prepared By:  
CA Pradeep Jain
And Sukhvinder Kaur, LLB[FYIC] 

The scheme of refund of service tax paid on specified services which were utilised for export of goods was given effect in 2007 vide Notification No. 41/2007-ST dated 06.10.2007. The exemption was granted by way of refund. However, announcing the grant of exemption and actual granting of refund of service tax paid proved to be two different scenarios. The exporter claiming refund of service tax was not granted refund claim on various issues. Like for Port services, the ground taken for rejecting the refund was that the Authorisation from the Port Authorities was not obtained by the service provider providing Port and other port services. The issue that a particular service would fall under the Port services was also disputed. For example the Terminal Handling Charges and Repo charges were alleged to be not falling under the Port services.
 
The refund claim of services provided by Customs House Agent services was being rejected on the various grounds. The refund was not granted if exporters invoice no and date was not mentioned in the service provider’s invoice.  That the licence number of the CHA was not mentioned on the invoice of the CHA.
 
For fumigation (specialized cleaning services) the refund claim was being denied on the ground that the exporter had not produced a written agreement with the buyer for carrying out the cleaning activity of export cargo.
 
Service tax paid on Insurance service availed regarding export goods was being denied on the ground that the  document issued by the insurer for payment of insurance premium was not specific to the export goods. These are only few of the grounds for denying refund claim. These issues were not the conditions which the claimant-exporter were not fulfilling intentionally. But these were technical issues which were existing and could not be addressed.
 
Thereafter, to remove the anomalies existing in Refund scheme contained in Notification No. 41/2007-ST, the Government had introduced an improved scheme vide Notification No. 17/2009-ST dated 07.07.2009. The said Notification removed certain anomalies existing in Notification No. 41/2007-ST but gave birth to new issues. We have written a series of articles titled “Johnny and service tax refund- Part-I” to bring about the problems faced by the exporters.
 
The refund claims under Notification No. 17/2009-ST were being denied on newer grounds. The use of the word that no refund claim less than Rs. 500/- will be entertained was interpreted by the Department to the effect that the each invoice/shipping bill was to be treated as an individual refund claim instead of the entire refund claim filed for one consignment/period.
 
Another issue was that the documents were not certified in the manner provided in the Notification. It was being insisted that the certification was to be done on the original invoice and if done afterwards, was not accepted. The refund claim of service tax paid on CHA services was being denied on the ground that the CHA licences numbers were not present in the invoices or the CHA was not holding valid licences. The refund of Terminal handling charges was denied saying that it is claimed under port charges. Instead it should be claimed under that category only. But there was no category like Terminal handling charges in the service tax. In nutshell the refund was not provided to the exporters. We once again continued with article series “Johnny and service tax refund- Part-II” to highlight the problems of exporters. Further, it was demanded through series of representation from all associations that the straight forward exemption should be granted in place of exemption by way of refund.
 
Now, in the Budget 2011-12, the Finance Minister has proposed to introduce a scheme for the refund of service tax paid on specified services used in export of goods on the lines of drawback of duties in a far more simplified and expeditious manner. This has been proposed to reduce the considerable difficulties in the sanction of refunds.
 
This may reduce the difficulties faced by the exporter in claiming refund. The technical issues may be redressed and fewer conditions would be required to be fulfilled. Thus, this is a welcome step on behalf of the Government which will help the exporters.
 
The Government has not agreed to demands of exporters of straight forward refund but has allowed the refund only. But it should be formulated in such a way that the exporters get the refund and it is not stuck up again as in old schemes. Hope for the best.  

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Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
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NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
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Phone No. :
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Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com