TIOL-DDT 1011 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 1011</font><br> 15.12.2008<br> Monday</strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Refund of service tax under notification No. 41/2007-ST - Board clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Notification No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_041.htm" target="_blank"><strong>41/2007-ST</strong></a>, dated 6/10/2007 allows refund of service tax paid on specified services used for export of goods. The Board has from time to time examined the procedural difficulties arising in implementation of this refund scheme. In this context, a circular (No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/sercir101.htm" target="_blank"><strong>101/4/2008-ST</strong></a>, dated 12.5.2008) was issued earlier whereby the procedural difficulties that were being faced by the merchant exporters and the exporters having multi location offices were resolved.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has received further references from field formations and trade seeking clarification on other procedural issues. Trade has also reported delays in sanction of refund claims.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has now issued further clarifications for streamlining of procedures.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>I </strong>: The procedure for availing refund, under the notification, <font color="#FF6633">by a manufacturer exporter not registered with central excise is as under:</font></font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">1. He shall file the claim with the central excise authority having jurisdiction over the factory of manufacture [para 2 (b)(i) of the notification];</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">2. He shall file a declaration in the format given in the annexure to the notification. The CX authority would issue a STC No. (Service Tax Code) to him [para 2 (c) and 2(d) of the notification].</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue raised by some of the exclusive Central Excise Commissionerates is that they do not have access to the System for Allotment of Service Tax Payer Code (SAPS). Hence, exclusive Central Excise Commissionerates in places like Delhi and Bangalore have not been able to process the refund claims filed by the manufacturer exporter not registered with central excise.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>CLARIFICATION</u>: </strong>The Directorate of Systems has reported that there is no restriction for exclusive Central Excise Commissionerates in having access to SAPS. Therefore, exclusive Central Excise Commissionerates, not having access to SAPS at the moment, may approach the Directorate of Systems to get the access to the centralized software.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>II: </strong>One of the conditions of the notification is that the exporter claiming exemption has actually paid the service tax on the specified services [para 1(c) of the notification]. The other condition is that the refund claim shall be accompanied by document evidencing payment of service tax [para 2(f) (ii) of the notification] <strong>. </strong>In this regard the following issues have been raised.</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Whether the invoices/bills/challan issued by the service provider, showing service tax amount could be treated as evidence that the exporter has paid the service tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The invoices produced by the exporters are at times not complete (i.e. does not have STC code of service provider)</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. One to one correlation between payment of ST and invoice is difficult in many cases.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>CLARIFICATION</u>: </strong> The invoices/challans/bills issued by supplier of taxable service, in conformity with rule 4A of the Service Tax Rules, 1994, are reasonable evidence that the services on which refund is being sought are taxable service. The compliance of condition that exporter has actually paid the service tax rests with the exporter claiming refund. Therefore, in so far as this condition is concerned, the refund claim should be processed based on furnishing of appropriate invoices/bills/challan by the person claiming refund and undertaking to the effect of payment of service tax by him. For the purposes of compliance verification, random checks should be carried out independently and where the refund amount is significant, post refund audit may also be carried out.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As regards incomplete invoices/bills etc, rule 4A of the Service Tax Rules, 1994 prescribes the statutory requirement. Compliance of this rule requires that the invoices/challan/bills should be complete in all respect. Therefore, the exporter claiming refund of service tax under notification No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_041.htm" target="_blank"><strong>41/2007-ST</strong></a> should ensure in their own interest that invoices/bills/challan should contain requisite details (name, address and registration No. of service provider, S. No. and date of invoice, name and address of service receiver, description, classification and value of taxable service and the service tax payable thereon). <strong>Refund claim cannot be allowed on the basis of invoices not having complete details as required verification cannot be carried out by the department on the basis of incomplete invoices.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>III: </strong>Vide instruction F. No. 341/15/2007-TRU, dated 17.4.2008, direction has been issued that refund claim be disposed of within thirty days. Commissioners have stated that it is not practically feasible in all cases to dispose of the refund claim within this time frame in view of procedural and other issues involved in processing of claim.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><u>CLARIFICATION</u>: </strong>The difficulties arising in processing of claims may be brought to the notice of the Board. The procedural difficulties brought so far to the notice of the Board have been clarified earlier vide circular No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/sercir101.htm" target="_blank"><strong>101/4/2008-ST</strong></a>, dated 12.5.2008 and vide this circular. This should enable the field formations to dispose of the pending refund claims expeditiously. Therefore, every effort should be made by field formations to adhere to the prescribed timelines.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Board has further decided that simplified procedure for refund, as prescribed by the Board vide circular No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2006/excircular828.htm" target="_blank"><strong>828/5/2006-CX</strong></a> dated 20.4.2006 for sanction of refund/rebate of unutilized CENVAT credit under rule 5 of the CENVAT Credit Rules, 2004/rebate would mutatis mutandis apply to refund claims under notification No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_041.htm" target="_blank"><strong>41/2007-ST</strong></a>. Under this simplified procedure, 80% of the due refund amount is sanctioned as <em>adhoc </em> interim refund to specified category of exporters having good track record, within 15 days of filing of a refund claim, subject to the condition that refund claim is complete and contains the requisite documents.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">For this purpose, the specified category of exporters would be</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) All exporters having export turnover of more than Rs 5 crore in the current or preceding financial year;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) PSUs including PSUs of State Governments;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Star Export Houses as specified under Chapter 3.5 of the Foreign Trade Policy, 2004-2009;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Manufacturer-exporters registered with Central Excise who have been exporting during the previous two financial years and have minimum export of Rs. 1 crore or more during the preceding financial year.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(v) Exporters registered with service tax or central excise who have paid central excise duty and/or service tax amounting to Rs. 1 Crore or more during the preceding financial year;</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(vi) All Export Oriented Units.</font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants wide publicity to be given to make the stakeholders aware of the clarification and compliance should be monitored. Any difficulty faced in processing of refund claims may be immediately brought to the notice of the Board.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Good Board issues such good clarifications and instructions, but then hardly monitors whether they are followed. It is easier for the proverbial camel to pass through the head of a needle than to get a refund from the department, especially during the last quarter of the fiscal when they are all busy with meeting Revenue targets. Many Commissioners are openly directing their Assistant Commissioners to reject refund claims on some pretext or the other - they don't mind saddling the government with unnecessary interest burden. The Board should fix a target for refunds too.</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=41&filename=notification/servicetax/2008/sercir106.htm" target="_blank">Service Tax Circular No. 106/9/2008-ST Dated: 11th December, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Refund of service tax under notification No. <a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_041.htm" target="_blank">41/2007-ST</a> - Mysore Commissioner Clarifies</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With regard to refund to be claimed by the manufacturer-exporter, Board's Circular No. 101/2008 - ST clarified, "As regards the manufacturer exporter, the proviso (i) to para 2(b) of Notification No. 41/2007-Service Tax prescribes that he shall file the claim of refund to the Assistant Commissioner/Deputy Commissioner of Central Excise, having <strong>jurisdiction over the factory </strong> of manufacture or warehouse."</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This does not seem to be applicable in Mysore - the Mysore Commissioner has issued a Trade Notice clarifying that manufacturer-exporter falling in the revenue districts of Mysore, Mandya and Chamarajanagar are required to file refund claims relating to service tax paid on the specified services used for export of goods with the Assistant Commissioner of Central Excise, ST & EOU Division, Mysore.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Of course according to the Commissioner, the manufacturers falling in the jurisdiction of Division I, II & III, Mysore have dual control of Assistant Commissioner, Central Excise Division, Mysore and Assistant Commissioner, ST & EOU Division, Mysore.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But what prevents the assessees of these Divisions from filing the refund claims with their jurisdictional Division, especially when the Notification so stipulates and the Board Circular reiterates that?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board Circulars may not be binding, but Notifications are - at least as of now.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/mysore_treade_notice.htm" target="_blank">Mysore Commissionerate Service Tax Trade Notice No. 15/2008 Dated: 5th December, 2008</a></strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBEC Chief launches speed-boats in Mumbai</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/bombayboat.jpg" alt="Legal Corner Icon" width="270" height="180" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong>Chitra, Ila and Koushalya - were former senior officers of the CBEC and now they will be guarding our shores. The three hi-tech speed boats launched in Mumbai on Saturday by Indian Customs Chief, PC Jha carry their names.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chitra will cover Okha and Porbunder in Gujarat. Ila will patrol Valsad, Surat and Umargaon ports in Gujarat. And Kaushalya is for the Mumbai coastline.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">These Category-I vessels built by a Malaysian company Gold Bridge are large air-conditioned boats, 20 metre in length, and are capable of a speed of up to 25 knots. These vessels can stay in sea up to three days and are equipped with radar, GPS, satellite communication and VHF.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Customs Department will be acquiring 100 more vessels.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is it consequent to the terrorist attack on Mumbai? We can't be really that fast - these were ordered much earlier but delivered now.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is the Customs' role in protecting our shores? In tomorrow's world, collecting Customs duty by itself may not be an important job of the Customs Department - that can be even outsourced. Protection against smuggling of arms, terrorists and drugs may be the more important job of the future Customs officers.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The US Customs is called Customs and Border Protection - Is the Indian Customs ready?</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">- Tomorrow's cases</font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Removal of capital goods after use should be after reversal of credit initially taken - Tribunal</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> the present case, there is no sale of the goods nor any sale price is available. The respondents have arrived at a depreciated price in terms of Rule 57S(2) which was no longer there in the statute book on the date of clearance. Once Rule 57S(2) did not exist on the date of clearance, the question of its applicability to the respondents case simply does not arise.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Revenue's crush with chalk powder exports ends in duty benefit to buyer of the DEPB scrip - Tribunal by majority holds duty cannot be recovered from importer who used the scrip on account of fraud committed by exporter</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DURING </strong> 2001, a sensational case was detected by DRI in ICD Hyderabad relating to the export of chalk powder in the guise of bulk drugs. The case we are reporting today relates to an importer who purchased the DEPB scrips from this exporter of chalk powder. The DEPB licences were subsequently cancelled by the licensing authority in 2002.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>As Assessing Officer fails to issue notice within period of 12 months from the end of month in which assessee filed block return, assessment is null and void: ITAT</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> provisions of section 143(2) of the Act though a procedural one is mandatory and the Assessing Officer is bound to follow that if he decides to determine the undisclosed income of the assessee. As the Assessing Officer failed to issue the notice within the period of 12 months from the end of the month in which the assessee filed the block return, there is fetter on the power of the Assessing Officer to make the assessment and hence the assessment made by the Assessing Officer is null and void.</font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until then with more <strong>DDT</strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Day.</font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p> </body> </html>