The Government of India is liberal when it comes to exports to support foreign trade. The Government has provided some privileges to the exporters of the goods and/or services. According to the Service Tax Rules, 1994, where any service is exported, the Central Government may grant refund of Service Tax paid or duty paid on input services or inputs used in providing such service which shall be allowed on meeting certain safeguard & conditions brought vide Notification No 27/2012 C.E. (NT) dated 18.06.2012.

According to the said Notification, there are certain conditions to be fulfilled in order to file a proper refund claim, by the manufacturer or service provider. The primary requirement is that more than one claim cannot be filed for any quarter, however a person exporting goods and services simultaneously, may be allowed to submit two refund claims, one in respect of goods exported and other in respect of the export of the services, for every quarter.

The amount of the refund claim filed shall not be more than the amount lying in balance, at the end of the quarter for which refund claim is being made or at the time of filing of the refund claim, whichever is less. In simple words there should be the minimum balance of the CENVAT Credit, which is sought to be claimed as refund, in the account of the exporter at the time of filing of the refund claim and simultaneously such amount of refund has to be debited by the claimant from his CENVAT Credit account at the time of making the refund claim.

The claimant will be required to submit an application in prescribed format, addressed to the Assistant/Deputy Commissioner of the Central Excise in whose jurisdiction the registered premises of the service provider is situated. Such application shall be accompanied with the documents specified as enclosures relating to the relevant quarter of refund, before the expiry of one year from the day on which the payment has been received or the invoice has been issued as clarified by recent Notification No. 14/2016 CE (NT) dated 01.03.2016.

The specified documents to be submitted with the application include a certificate in Annexure A-I duly signed by the Auditor (statutory or any other), FIRC and Bank realisation statements.

According to the current scenario, there is mis-understanding as to the amount to be considered to be reflected in application under Export Turnover of services which shall be the amount of consideration received and not the amount billed by the exporter of service. There have been incidents where the Department also calls for the details of the input invoices to verify the amount claimed as refund. Certain queries are leading to either rejection or delay of refund, is the difference in address mentioned in the Input invoices from that stated in ST-2 Certificate. Also there are clarifications sought as to whether the amount of cenvat credit has been reversed at the time of filing of the refund claim and not on monthly or any other intervals, by demand of ledger of input credit.

According to the CENVAT Credit Rules, 2004, the refund shall not be allowed if the manufacture or provider of output service avails the drawbacks or claims any rebate of duty. Though the rules for granting of refund to exporters seem simple but the procedural complexities make it difficult for refund claimants.

Contributed by Ms. Ruhi Jhota: Ruhi Jhota is an Advocate and practicing in Indirect Taxes. She possesses strong research background which is required to present the complexity of taxation in terms that a layman can understand.

Contact for queries: ruhijhota@gmail.com