Service Tax Refund claims of Exporters rejected in wholesale

NEW DELHI. Service Tax Refund claims filed by the Exporters have been rejected in wholesale on frivolous grounds by service tax department inspite of the statement by new Chairman of CBEC V. Sridhar that refund claims have been smoothened.

The grounds of rejection of the claims as mentioned in the Adjudication Orders issued by the Officers of the rank of Assistant/Deputy Commissioners are as under:

1.        The classification of service was not mentioned on invoices on which refunds were claimed and the invoices were not proper in terms of Rule 4A of Service Tax Rules.

2.        No co-relation was established between the invoices on which refund was sought and the exports made.

3.        No evidence of payment of service tax was produced.

4.        As per condition prescribed under Para 1(e) of Service Tax Notification No. 41/2007 dated 6th October 2007; the goods should have been exported without availing of drawback of service tax paid on specified service under the Customs, Central Excise duties and Service Tax drawback Rules,1995. This condition is not fulfilled.

(It appears that service tax department is not aware that the said condition has already been deleted vide Notification No. No.33/2008-Service Tax)

Refund claim was not filed within 60 days from the end of the Quarter of export and hence   claims are time-bared

(It appears that service tax department is not aware of CBEC Circular No. 112/06/2009-ST dated 12th march 2009 which clarifies that limitation period for filing claim is 6 months from end of the Quarter)

In no situation; the goods can be exported out of India without availing the specified services on which refund is admissible. Then where is the question of rejection on such grounds? But it is not easy to “satisfy” service tax department that too when you are claiming refund.

It would be better that before giving statement with photograph in newspapers; CBEC Chairman calls for the following details from all Commissioners of Service Tax:

(i)        Number of Refund Claims disposed by the Department

(ii)       Number of Refund claims where refund sanctioned and the amount of refund sanctioned

(iii)      Number of Refund claims where refund rejected and the amount involved

But whether the new Chairman of CBEC would also give these figures in newspapers or not; it is to be seen. Otherwise there can be a Question under Right to Information Act by Exporters Association or stakeholders for which the department should be ready with the figures.

The intention of the Government is to give refund of all taxable services used by exporters in export of goods. Then why not straightway exempt such services from payment of service tax instead of going through the mechanism and cumbersome procedure for refund?

(Source: Allindiantaxes)

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