Service Tax exemption on GTA service utilized for Export of Goods – Exporters troubled by lack of foresight of Board
IN we highlighted the problems faced by the exporters seeking refund of service tax paid on services used by exporters under Notification No. 41/2007-ST dated 06.10.2007 as amended and the lack of clarity on the time limit for claiming refund.
While the Board may take its own sweet time in resolving the issues faced by the exporters, it appears the problems faced by the exporters at the ground level is compounding by the day. The flow of mails from exporters to TIOL explaining the troubles they encounter with the tax authorities in the field continues unabated.
While Notification No. 18/2009-ST dated July 7, 2009 provides that
a) services provided to an exporter in relation to transport of goods by road directly from their place of removal, to an inland container depot, a container freight station, a port or airport, as the case may be, from where the said goods are exported; or
b) services provided to an exporter for transport of goods by road from any container freight station or inland container depot to the port or airport, as the case may be, from where the said goods are exported;
are wholly exempt from the levy of service tax leviable under Sections 66 and 66A of the Finance Act, 1994.
The exporter will have to produce the consignment note in his name to support his claim for exemption.
It is common knowledge that exporters receive empty containers from the ports/container freight terminals to their premises for stuffing of export goods under self sealing mechanism or excise supervision and subsequently cleared to the port for export. The exporters incur expenditure for both inward and outward transportation of containers i.e. from Port/Container Freight Terminals to the exporter's premises and back to Ports. However, it seems that the Board has always been under the impression that all inward transportation would invariably involve receipt of inputs into the factory which is an input service and there is no need to exempt this service for exporters. Since no inputs are received when “empty containers are received, this “INWARD TRANSPORTATION” should also have been included in the exemption Notification.
It appears that the authorities in the field are allowing exemption only for the charges paid for outward transportation of stuffed containers from exporter's premises to the Port of export is exempt from levy of service tax in terms of this notification and not the charges paid for inward transportation of empty containers from the Ports/Container Freight Terminals to exporter's premises.
It is plain common sense that for clearing export goods in containers from exporter's premises to the ICD , CFS , Port etc, they have to invariably receive empty containers from the Ports/Container Freight Terminals and charges are levied on the exporters for both inward and outward movement of containers. Without receiving empty containers at their premises, how can the exporters who utilize containers for clearing bulk goods, export their consignments?
Time and again it was reiterated by the Finance Minister that exports are a priority for this country and here we have officers at top who have no vision of the ground realities and officers in the field whose only job is to either find loopholes in the notifications issued by the Finance Ministry
These are testing times for the economy. While on the one hand it is plagued with several problems like recession, price rise of essential commodities, sluggish demands, job losses etc, on the other, the country's farming community is reeling under severe drought, one of the worst in recent memory, which has a cascading effect on the rest of the economy. In such gloomier times, if exporters who earn foreign exchange for the country are put to hardship then God save this country.
The fundamental principle of taxation vis-à-vis exports is to export only goods and services out of the country and not incidental taxes on such goods or services. It is for this prime reason that such exemption notifications are issued by the Government to benefit exporters.