Service Tax Refund Claims of Exporters being rejected

MUMBAI. It is back to square one for exporters who were dreaming for refund of service tax paid on services used for export with service tax department rejecting their claims on legal grounds.

 

The dilemma is caused due to the mechanism adopted by the exporters who handover the export shipments to Freight Forwarders who in turn handover the export consignments to Shipping Lines. The Shipping Lines are paying service tax on Port Service, Other Port Services and other notified taxable services at the time of clearance of consignments for export. The Bills of such taxable services are in the name of Shipping Lines and it is a consolidated bill for several shipments. The Shipping Lines are availing the credit of service tax paid on such bills. Subsequently; the Shipping Lines are raising their Bills to the Freight Forwarders who in turn are availing the credit of service tax and are, thereafter, paying service tax under BSS (Business Support Service). In the end; the Bill raised by the Freight Forwarder in the name of exporter is for service tax paid under BSS.

 

Now the legal objections raised by service tax department are that the BSS is not a notified service for grant of refund. Though Port Services and Other Port Services are notified services for refund; but the service tax payment is not in the name of exporters and moreover, the Shipping Lines have already availed the credit of service tax paid on such services. As a natural corollary; the exporters are not entitled to refund.

 

Notification No. 41/2007-Service Tax dated 6th October, 2007 exempts specified taxable services received by an exporter and used for export of goods (hereinafter referred to as said goods), from the whole of the service tax leviable thereon under section 66 and section 66A of the said Finance Act, subject to the conditions as under:

 

(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 said 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 said 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;

 

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(Source: Allindiantaxes)

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3 Comments

  1. October 1, 2008 at 3:35 pm

    I have visited your website it’s very nice!!!!!!!!!!!
    Your Post is Very nice and the information given here is very helpful.
    Nice Post!!!!!!!!!!!
    Thanks,
    Webmaster
    http://www.importexportus.com/supply_chain_solutions.htm

  2. namita singhania said,

    November 19, 2008 at 12:33 pm

    dear sir,
    the info. recd is somehow helpful i think not complete. so pl provide me total info. about service tax refund procedure,.
    I will be claiming 1st time this refund so i dnot know anything abt it.
    so pl. send me the form,time period,specified services,documents submitted with the form.
    Namita singhania

  3. tushar vora said,

    January 21, 2009 at 3:05 pm

    dear sir,

    please refer your below matter on your web site.

    ” Service Tax Refund Claims of Exporters being rejected
    September 8, 2008 at 5:01 pm (Service Tax)
    Tags: Exporters, Refund, Service Tax

    MUMBAI. It is back to square one for exporters who were dreaming for refund of service tax paid on services used for export with service tax department rejecting their claims on legal grounds.

    The dilemma is caused due to the mechanism adopted by the exporters who handover the export shipments to Freight Forwarders who in turn handover the export consignments to Shipping Lines. The Shipping Lines are paying service tax on Port Service, Other Port Services and other notified taxable services at the time of clearance of consignments for export. The Bills of such taxable services are in the name of Shipping Lines and it is a consolidated bill for several shipments. The Shipping Lines are availing the credit of service tax paid on such bills. Subsequently; the Shipping Lines are raising their Bills to the Freight Forwarders who in turn are availing the credit of service tax and are, thereafter, paying service tax under BSS (Business Support Service). In the end; the Bill raised by the Freight Forwarder in the name of exporter is for service tax paid under BSS.

    Now the legal objections raised by service tax department are that the BSS is not a notified service for grant of refund. Though Port Services and Other Port Services are notified services for refund; but the service tax payment is not in the name of exporters and moreover, the Shipping Lines have already availed the credit of service tax paid on such services. As a natural corollary; the exporters are not entitled to refund. ”

    we are manufacturer & exporter of cotton bags.

    our CHA is Velji Dosabhai & Sons

    As per the service tax rules now duty drawback availing unit can also ask for refund of service tax.

    we pay terminal handing charge + hbl charges to Our CHA & we are receiving bill in our name from shipping line.

    we are registered with service tax department under goods transport agency

    can we get refund of service tax against amount we pay for goods transport agency.

    please advise.

    Thanks

    Tushar Vora


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