Computation of limitation period - Refund claim - last day of quarter?
A netizen sent us this mail recently -
For IT sector assessees, whose major turnover is of export, refund of CENVAT Credit is a major point of dispute with the Department.
Rule 5 of the CENVAT Credit Rules, 2004 was substituted w.e.f. 1st April, 2012. Corresponding Notification was also changed - from 5/2006-CE(N.T.) dated 14.03.2006 to 27/2012-CE(N.T.) dated 18.06.2012.
A number of refund claims are being rejected in part or full on the basis of calculating the time barring period of one year under Section 11B of the Central Excise Act, 1944, based on the 'relevant date' as the date of receipt of export proceeds, as taken by the Department. As multiple export proceeds are usually received during almost all quarters, the first of such dates is taken by the Department and refund is rejected in part, or full accordingly.
Our firm is also a victim of such vagaries of interpretation.
As a large number of IT service providers are the IT development/support centers of many multinational companies, they mostly are billing only to their Parent/Group companies abroad and payments are also received from such Parent/Group Companies at regular intervals and amount received under one FIRC is at times adjusted against multiple invoices. Also, payment against one invoice is at times received under multiple FIRCs on various dates.
We were, therefore, pleased to read an article titled Filing of quarterly refund claims by exporters - Computation of limitation period on your portal recently and where the erudite author has succinctly highlighted the issue and requested the Board to come out with a clarification in the matter.
Incidentally, since DDT supposedly has a lot of inside information of the various Revenue formations, could you please inform us of any instance where any lower appellate authority has taken a pro-assessee stand on the issue?
Incidentally, DDT has learnt that the Commissioner of Service Tax (Appeals), Pune has passed an order on this issue and where it is concluded that - the last date of the quarter is the 'relevant date' for calculating the time limit of one year under Section 11B of the Central Excise Act, 1944.
The issue before him was -
• What was the relevant date for filing the refund claim for the period April to June 2012 under Rule 5 of CCR and accordingly whether the refund claim of Rs.10,48,656/- was correctly held as time barred and rejected?
The facts: In this case, the refund claim was filed on 28.06.2013 for the period from April, 2012 to June, 2012. Some Additional information was submitted by the Appellant on 13.06.2014 and 14.07.2014. The original authority held that the earliest date of realization of export proceeds during the period from April, 2012 to June, 2012 was 18.04.2012 vide FIRC dated 18.04.2012 against Invoice dated 05.03.2012 and, therefore the last date for filing refund claim was 17.04.2013 but since the same was filed on 28.06.2013, it was held that the same was filed beyond one year from the relevant date.
In an elaborate order laced with illustration the Commissioner (A) held -
++ I find that unless the entire quarter is completed, the exporter cannot file his refund claim, as the crucial documents like Bank Realization Certificates issued during the said quarter are required to be submitted together along with the refund claim. Also, the formula prescribed in the new Rule 5 of the CCR requires the use of ‘Net CENVAT Credit' which can be arrived at only at the end of the relevant quarter. Accordingly, I find that it is not legally correct to consider any date in between the quarter as the ‘relevant date'.
++ I am of the clear view that by no Rule or Notification, the period of one year provided under Section 11B of the CEA can be curtailed. Therefore, this interpretation adopted by the Ld. Respondent clearly violates the provisions of Section 11B of the CEA and has to be accordingly rejected. In other words, the one year period provided in Section 11B of the CEA cannot be curtailed by any interpretation of any Rule or Notification, as they are pieces of sub-ordinate legislation. Thus, I conclude that the ‘relevant date' for the purpose of new Rule 5 of the CCR is the last date of the relevant quarter and an exporter can file his refund claim within one year from the last date of the relevant quarter.
DDT adds - It is also pertinent to note that the logic of taking the last date of the quarter as the 'relevant date' was accepted in principle by the Central Govt. in Notification No. 12/2014-CE(N.T.) dated 3.3.2014 dealing with refund of CENVAT Credit under Rule 5B of the CENVAT Credit Rules, 2004, wherein relevant date has been taken as the date "the due date of filing of return for the half year" [Para 2(a) of the said Notification refers].
Hopefully, the CBEC should come out with a clarification and set the matter to rest.