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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: 18 Sep, 2007
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SERVICE TAX REFUND FOR EXPORTERS

REFUND OF SERVICE TAX PAID BY EXPORTERS
 
 
1.)        INTRODUCTION
 
The Commerce Minister of India, Mr. KAMAL NATH had announced in his Foreign Trade Policy that exporters will not be charged service tax in order to mitigate there cost and enhance there international competitiveness. But the Finance ministry was not agreeing to the same. Both ministries have long discussing to finalize the same. Today, the Notification No. 40/2007-ST, dated: 17-09-2007 has been issued which provides for the refund of the service tax paid by the exporter. The notification allows the exporters to claim refund of the service tax paid by them provided they fulfill the conditions mentioned there under the notification. This article attempts to give a quick analysis of the key factors of this notification.
 
2.)        CONDITIONS TO BE FULFILED
 
The notification specifies that to avail the refund the exporter has to satisfy certain conditions. The conditions mentioned therein are as follows: -
 
Ø             The exemption (i.e. refund) should be claimed by the exporter of the goods for the specified services received and used by the exporter for export of the said goods only;
 
Ø             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 said goods;
 
Ø             The exporter claiming the exemption has actually paid the service tax on the specified services;
 
Ø             The exemption or refund shall not be claimed except under the said notification.
 
 
3.)        SPECIFIED SERVICES
 

 

S.NO.
TYPE OF SERVICE
1
Port Services provided for export. (Section 65[105][zn] )
2
Other port Services provide for export. (Section 65[105][zzl])
3
Services of transport of goods by road from ICD to port of export provided by Goods Transport Agency. (Section 65[105][zzp])
4
Services of transport of export goods in containers by rail from ICD to port of export. (Section 65[105][zzzp]).
 
 
Thus, the refund is to provide in respect of the four services only. The logic of Finance ministry is that exporter can claim Cenvat credit on the rest of services. They will be allowed the refund under Rule 5 of Cenvat credit Rules for the rest of services. But the credit is not available for above listed services. Secondly, they will be able to connect directly these services with the export goods. Hence the refund for only these four services has been allowed.
 
 
4.)        PROCEDURE FOR CLAIMING REFUND         
 
            The Notification provides for the manner in which the exemption should be claimed. The various quotes of the notification are as under: -
 
o         The exemption can be claimed by that person only if he is exporter of the said goods and he himself is liable to pay service tax for the said services i.e. he is both exporter of goods and person liable to pay service tax.
 
o         The claim of refund by the exporter should be by way of filing a “claim for refund of service tax” paid on specified services. The exporter will have to enclose respective documents evidencing that the goods have been exported and service tax thereon have been paid.
 
o         The claim for refund should be filed on a quarterly basis, within sixty days from the end of the relevant quarter during which the said goods have been exported.
 
o         There after the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise as the case may be will allow the refund after satisfying themselves that all the provisions have been complied with.
 
o         Where any refund of service tax has been paid to an exporter but the sale proceeds in respect of the said goods have not been realised by the exporter within the period allowed under the FEMA, 1999 then, such service tax refunded shall be recoverable as if it is a recovery of service tax erroneously refunded.
 
 
5.)        CONCLUSION
 
The Finance ministry has not provided what has been demanded by the exporters. Firstly, it is not exemption but the refund. The exporter has to waste his time and money in the department for getting the refund. As we all know that it is very difficult to get the refund from the department. In place, a simple procedure which is available for the goods under Rule 19 should have been prescribed. Secondly, all the input services have not been included in the same as desired by the commerce minister and exporter. Thus, all the exporters will not be benefited from the same. Like Handicraft exporters cannot claim the Cenvat credit as there final product is exempt from the duty. Thus, it is half hearted approach on the part of the Finance minister. Moreover, it took around six months to finalize the scheme. Why there is lack of the communication and co-ordination between these two main arms of the Government. There are still many other promises made by Commerce minister in Foreign Trade Policy but the Finance Ministry is not coming with the amendments in Custom notifications. This create undue harassment for the exporters.

 

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