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Publish Date: 06 May, 2008
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Refund of Service Tax To Exporters

 

Refund of Service Tax To Exporters
 
 
Notification No, 40/2007-ST, dated 17-9-2007 provides for the refund of service tax paid on Services received by an exporter and used for export of goods.
 
Later on, Notification No. 41/2007-ST, dated 6-10-2007 was issued which superseded the Notification No. 40/2007-ST, dated 17-9-2007 and provided for the refund of service tax paid; in a more extended and clarified manner as under: -
 
The Notification provided for the prerequisites as follows: -
 
(a) The exemption shall be claimed by the exporter of the goods for the specified services received and used by the exporter for export of the goods;
 
(b) The exemption claimed by the exporter shall be provided by way of refund of service tax paid on the specified services used for export of the goods;
 
(c) The exporter claiming the exemption has actually paid the service tax on the specified services;
 
(d) No CENVAT credit of service tax paid on the specified services used for export of said goods has been taken under the CENVAT Credit Rules, 2004. 
 
(e) The said goods have been exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995. 
 
 
(f) The exemption or refund of service tax paid on the specified services used for export of said goods shall not be claimed except under this notification i.e. no other exemption is claimed other than under this Notification.
 
The Procedure to be followed for availing the exemption contained in this notification is as under: -
 
(a) The person liable to pay service tax shall pay service tax as applicable on the specified services provided to the exporter and used for export of the said goods, and such person shall not be eligible to claim exemption for the specified services:
 
Provided that where the exporter of the said goods and the person liable to pay service tax are the same person, then in such cases exemption for the specified services shall be claimed by that person;
 
(b) The exporter shall claim the exemption by filing a claim for refund of service tax paid on specified services:
           
 
Provided that,-
 
(i) the manufacturer-exporter of the goods shall file the claim for refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of manufacture or warehouse, and
 
(ii) The exporter, other than a manufacturer-exporter, shall file the claim for refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the registered office of such exporter,
 
(c) The exporter who is not registered as an assessee under the Central Excise Act, 1944 or the rules made there under, or the said Finance Act or the rules made there under, shall, prior to filing a claim for refund of service tax, shall file a declaration in the Form specified with the respective jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be; 
 
(d) The jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code (STC) number to the exporter within seven days from the date of receipt of the said Form; 
 
(e) The claim for refund shall be filed on a quarterly basis, within sixty days from the end of the relevant quarter during which the goods have been exported:
           
Provided that the said goods shall be deemed to be exported on the date on which the proper officer of Customs makes an order permitting clearance and loading of the said goods for exportation.
 
(f) The refund claim shall be accompanied by documents evidencing,-
 
(i) Export of the said goods;
 
(ii) Payment of service tax on the specified services for which claim for refund of service tax paid is filed;
           
(iii) Wherever applicable, a copy of the written agreement entered into by the exporter with the buyer of the said goods, as the case may be; 
 
(g) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself that the said services have been actually used for export of said goods, refund the service tax paid on the specified services used for export of said goods.
 
(h) Where any refund of service tax paid on specified services used for export of said goods has been paid to an exporter but the sale proceeds in respect of the said goods have not been realised by or on behalf of the exporter in India within the period allowed under the Foreign Exchange Management Act, 1999, including any extension of such period, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made thereunder, as if it is a recovery of service tax erroneously refunded. 
 
 
Later on, eight new services were added to the list of services mentioned in Notification No, 41/2007-ST, dated 6/10/2007 to enhance the scope of the exemption by Notification No. 42/2007-ST , Notification No. 3/2008-ST and Notification No. 17/2008-ST.
 
The table In summarized and comparative form is as under
 
S.No.
Notif. No.
Date of applicability
Description of service
Service Provider
Conditions applicable
1
40/2007
From 17/9/07 to 8/10/07
Port Services provided for export
(Section 65[105][zn])
Port or a person authorized by Port.
 
------
41/2007
From 9/10/07 onwards
2
40/2007
From 17/9/07 to 8/10/07
Other port Services provide for export
(Section 65[105][zzl])
 
Any other Port or person authorized by that port.
 
-----
41/2007
From 9/10/07 onwards
3
40/2007
From 17/9/07 to 8/10/07
Services of transport of goods by road from ICD to port of export provided by Goods Transport Agency
(Section 65[105][zzp])
 
Goods Transport Agency.
-----
41/2007
From 9/10/07 onwards
4
40/2007
From 17/9/07 to 8/10/07
Services of transport of export goods in containers by rail from ICD to port of export.
(Section 65[105][zzzp])
 
Any person other than Government Railway.
-----
41/2007
From 9/10/07 onwards
5
41/2007
From 9/10/07 onwards
Services provided to an exporter by an insurer (including a re-insurer carrying on general insurance business) in relation to insurance of export goods.
(Section 65(105)(d))
Insurer
Reinsurer.
Document issued by the insurer (including re-insurer) for payment of insurance premium and shall be specifically: -
 
·         Related to export goods, and
 
·         In the name of the exporter.
 
6
41/2007
From 9/10/07 onwards
Services provided by a technical testing and analysis agency in relation to technical testing and analysis of export goods (such technical testing and analysis is required to be undertaken as per the written agreement).
{Section 65(105)(zzh)}
Technical testing and analysis agency.
(i) The exporter furnishes a copy of the written agreement; and
 
(ii) The invoice issued by the service provider shall be specifically: -
 
·         Related to export goods, and
 
·         In the name of the exporter.
 
7
41/2007
From 9/10/07 onwards
Services provided by an inspection and certification agency in relation to inspection and certification of export goods (such technical inspection and certification is required to be undertaken as per written agreement).
{Section 65(105)(zzi)}
Technical inspection and Certification.
(i) The exporter furnishes a copy of the written agreement.
 
(ii) The invoice issued by the service provider shall be specifically: -
 
·         Related to export goods, and
 
·         In the name of the exporter.
 
8
42/2007
From 29/11/2007 onwards
Specialized cleaning services (namely disinfecting, exterminating, sterilizing or fumigating of containers) used for export of goods provided to an exporter.
Section 65(105)(zzzd)
Any person accredited by the competent statutory authority to provide such specialized cleaning.
(i) The exporter furnishes a copy of the written agreement; and
 
(ii) The service provider must be accredited by the competent authority for rendering of such specialized cleaning services.
 
9
42/2007
From 29/11/2007 onwards
Services provided for storage and warehousing of export goods.
Section 65(105)(zza)
Storage or warehouse keeper whose storage is approved by the competent authority and the storage and warehouse is exclusively used for storage of exports.
 
(i) The storage or warehouse must be approved by the competent authority; and
 
(ii) The storage or warehouse must be exclusively used for the purpose of storage or warehousing of export goods.
 
10
3/2008
From 19/2/2008 onwards
Services provided by a courier agency in relation to transportation of time-sensitive documents, goods or articles relating to export, to a destination outside India.
Section 65(105)(f)
Any Courier agency.
 
(i) The receipt issued by the courier agency specifies: -
 
·         Importer-exporter (IEC) code of the exporter;
 
·         Export invoice number;
 
·         Nature of courier;
 
·         Destination of the courier;
 
·         Name and address of the recipient of the courier; and
 
(ii) The exporter produces evidence to link the use of courier service to export goods.
 
11
3/2008
From 19/2/2008 onwards
Services provided in relation to transport of export goods directly from the place of removal, to inland container depot or port or airport, as the case may be, from where the goods are exported.
Section 65(105)(zzp)
Goods Transport Agency.
(i) Export goods are transported directly from the place of removal to inland container depot or port or airport, as the case may be, from where the goods are exported,
 
(ii) Invoice issued by the exporter in relation to export goods shall indicate the name of the inland container depot or port or airport from where the goods are exported,
 
(iii) Details of exporter’s invoice relating to export goods are specifically mentioned in the lorry receipt and the corresponding shipping bill,
 
(iv) Exporter shall declare in the refund claim indicating whether such service has been received from the said service provider for purposes other than for export.
12
3/2008
From 19/2/2008 onwards
Services provided in relation to transport of export goods directly from the place of removal to inland container depot or port or airport, as the case may be, from where the goods are exported.
Section 65(105)(zzzp)
Any person other than Government Railway.
(i) Export goods are transported directly from place of removal to inland container depot or port or airport from where the goods are exported,
 
(ii) Invoice issued by the exporter in relation to export goods shall indicate the inland container depot or port or airport from where the goods are exported,
 
(iii) Details of exporter’s invoice relating to export goods are specifically mentioned in the lorry receipt and the corresponding shipping bill,
 
(iv) Exporter shall declare in the refund claim indicating whether such service has been received from the said service provider for purposes other than for export.
 
13
17/2008
From 1/4/2008 onwards
Services provided by a custom house agent in relation to export goods exported by the exporter.
 Section 65(105)(h)
Custom House Agent.
Exporter shall produce, -
 
(i) Invoice issued by custom house agent for providing services shall include: -
 
Ø        Number and date of shipping bill,
 
Ø        Description of export goods,
 
Ø       Number and date of the invoice issued by the exporter relating to export goods,
 
Ø        Details of all the charges, collected by the custom house agent from the exporter in relation to export goods.  
 
(ii) Details of other taxable services provided by the said custom house agent and received by the exporter, whether or not relatable to export goods.
 
14
17/2008
From 1/4/2008 onwards
(i) Services provided in relation to collection of export bills,
 
(ii) Services provided in relation to export letters of credit such as advising commission, advising amendment, confirmation charges.
Section 65(105)(zm)
 
1.   Banking Company.
 
2.   Financial Institution
 
3.   NBFC
 
4.   Other Body Corporate
 
5.   Commercial Concern
 
Exporter shall produce evidence to link the use of services specified for goods exported.
15
17/2008
From 1/4/2008 onwards
Business Auxiliary Services to cause sale of goods exported.
Section 65(105)(zzb)
Commission agent, located outside India, and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him.
 
(i) Exporter shall provide agreement or contract or any other document, requiring the commission agent located outside India to provide services to the exporter in relation to sale of export goods, outside India,
 
(ii) Exporter shall declare the amount of commission paid or payable to the commission agent in the shipping bill,
 
(iii) Commission sought to be remitted is not on export of a canalized item, project exports, or exports financed under lines of credit extended by Government of India or EXIM Bank, or exports made by Indian partners towards equity participation in an overseas joint venture or wholly owned subsidiary,
 
(iv) Documents evidencing actual export of goods,
 
(v) Documents evidencing actual payment of commission to the commission agent,
 
(vi) Refund of service tax shall be restricted to actual amount of service tax paid or service tax calculated on two per cent of FOB value of export goods, whichever is less.
 
16.
24/2008
From 10/05/2008 onwards
Services of purchase or sale of foreign currency,
including money changing provided to an
exporter in relation to export goods.
Section 65(105)(zm)
 
1.   Banking Company.
 
2.   Financial Institution
 
3.   NBFC
 
4.   Other Body Corporate
 
5.   Commercial Concern
 
6.   Foreign Exchange Broker or
 
7.   Any other person
 
Exporter shall produce evidence to prove that
the services are used in
relation to goods exported.
17.
24/2008
From 10/05/2008 onwards
Services of purchase or sale of foreign currency,
including money changing provided to an exporter
in relation to export goods.
Section 65(105)(zzk)
 
1.   Foreign Exchange Broker
 
2.   Money changer
 
3.   Authorized Dealer of Foreign Exchange.
 
Exporter shall produce evidence to prove that
the services are used in
relation to goods exported.
18.
24/2008
From 10/05/2008 onwards
Services of supply of tangible goods for use,
without transferring right of possession
and effective control of tangible goods,
provided to an exporter in relation to goods exported by the exporter.
Section 65(105)(zzzzj)
 
Any Person.
Exporter shall produce evidence to prove that
the services are used in
relation to export of goods.

BY: -

F.C.A. PRADEEP JAIN

SIDDHARTH RUTIYA

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