Step-motherly Treatment for Service Exporters
Central Excise Act was enacted in 1944 and after 50 years, tax has been imposed on services vide Finance Act 1994. Thus the manufacturers are nearly 50 years older than the output service providers and may be this is the reason why Board while taking seriously the delays in sanctioning of refund claims to the manufacturer exporters, has turned a blind eye to the Output service exporters.
The manufacturer exporters can claim refund of service tax paid on certain notified services used for export of goods under Notification 41/2007-ST. Vide F. No. 341/15/2007-TRU Dated: April 17, 2008, instructions were given to the filed formations to dispose of the refund claims on priority basis and called for a report in the following format to be submitted by the Commissioners to the Chief Commissioners.
Sr. No. | Name of the exporter | Date of filing of refund claim | Amount of refund sought | Reason for delay in processing the refund claim |
Under Rule 5 of the CENVAT Credit Rules 2004, the exporters of output service can claim refund of service tax paid on the input services used for the output service read with notification dated 14.3.2006. Though Board has issued a Circular No. , dated 20-4-2006 to sanction 80% of the claim; these instructions are rarely followed by the field as the officers granting the refunds are treated as terrorists for targets and revenue by the department. DDT has learnt that many exporters are facing difficulties in getting the refunds and strangely, while the Board has taken seriously the refunds for manufacturer exporters and called for a report, there are no such instructions in respect of refunds under Notification except an eye-wash circular to grant 80% refund which is flouted left right and centre by the field.
The world is already witnessing the effect of recession to which Indian Industry is not immune; withholding the refunds on frivolous grounds would have serious impact on the Trade at this difficult time. An executive of an MNC told DDT "We operate on wafer thin margin of less than 10% in respect of our Indian entity and imagine the plight of the company if 12% service tax refund is held up".
Hope someone in the Board listens to the woes of Service Exporters.