The Notification - procedure, safeguards, conditions, limitations and COMPLICATIONS
SAFEGUARDS, conditions and limitations:
Refund shall be claimed of unutilised CENVAT Credit during the half year for which is refund is claimed for providing a) renting of a motor vehicle; b) supply of manpower; c) works contract.
Amount of refund is calculated by a formula A minus B, where
A = P multiplied by Q divided by R (PQ/R), where
P = CENVAT credit taken on inputs and input services during the half year
Q = turnover of output service under partial reverse charge during the half year
R = total turnover of goods and services during the half year
B = Service tax paid by the service provider for such partial reverse charge services during the half year.
[Kindly note that the letters P, Q & R have been used by DDT for purpose of easy understanding and do not find mention in the notification.]
Suppose P=30,000; Q=100,000; R=200,000 and B= 6,000 (all rupees) and the liability of service recipient is Rs 6,000 (50% under works contract)
P = 30,000
Q = 100,000
R = 200,000
A = 30000*100,000/200,000 = 15,000
B = 6,000
A-B = 15,000-6000 = 9,000
Refund entitled = Rs 6,000/- (9,000 or 6,000 - i.e., service tax liability of the recipient of service - whichever is less)
Is this kind of formula really necessary?
The Notification inter alia stipulates that the refund shall not exceed an amount of service tax liability paid or payable by the recipient of service; only one claim should be submitted for one half year; the amount of refund claimed should be debited in the CENVAT account; no refund is admissible for credit taken on input or input services received prior to the 1st day of July,2012.
Refund to be claimed in Form A within one year from the due date for filing Return. Claim for the period 1st July to 30th September 2012 can be filed by 30th June 2014.
At last - after nearly two years, the Board has come up with the notification, much to the relief of the assessees who are stuck with CENVAT credit that they cannot use. The Government has been withholding money that legitimately belonged to the assessees. Let's hope that at least now, they would clear the refund claims quickly without raising silly and frivolous objections. In fact the Board should have clarified that the principle of 'unjust enrichment' will not apply to these refund claims.
Notification No., Dated: March 03 2014