Exempted Service - Export - An unwanted 'NOT'
NEW Sub-rule 8 inserted in Rule 6 of the CENVAT Credit Rules by Notification No. 28/2012-CE NT dated 20.06.2012 reads as:
(8) For the purpose of this rule, a service provided or agreed to be provided shall not be an exempted service when:-
(a) the service satisfies the conditions specified under rule 6A of the Service Tax Rules, 1994 and the payment for the service is to be received in convertible foreign currency; and
(b) such payment has not been received for a period of six months or such extended period as maybe allowed from time-to-time by the Reserve Bank of India, from the date of provision.
This means that if payment is received within six months or within the time allowed by the RBI, the export of service would be treated as an exempted service and all liabilities follow. If the payment is not received, there is no liability!
Certainly, this couldn't have been the intention of the exalted lawmakers. The intention must be exactly the opposite, but the sentence is framed in such a complicated way that now export of services for which payment is received will be treated as exempted service and the exporter has to reverse the credit taken!!!. The sentence is so complicated that removal of the word, “NOT” will not solve this knotty problem.
In fact, a similar provision is correctly and nicely worded in the Act - Finance Act, 1994, in respect of rebate.
Proviso to Section 93A reads as,
Provided that where any rebate has been allowed on any goods or services under this section and the sale proceeds in respect of such goods or consideration in respect of such services are not received by or on behalf of the exporter in India within the time allowed by the Reserve Bank of India under section 8 of the Foreign Exchange Management Act, 1999 (42 of 1999), such rebates shall be deemed never to have been allowed and the Central Government may recover or adjust the amount of such rebate in such manner as may be prescribed.