Service Tax - Ease of Doing Business - Provisional and 80%?
THE revenue Boards are on an 'Ease of Doing Business' drive. The CBEC issued a Circular on Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules.
This year having been declared as the Year of Taxpayer Services, the Board has accorded primacy to speedy sanction of refunds in case of export of services. So, the Board has drawn up a scheme to fast track sanction of refund of accumulated CENVAT credit to exporters of services. This scheme is not a substitute for the various notifications but is meant to complement them and is aimed at enabling ease of doing business. The Scheme is applicable to refund claims filed on or before 31.03.2015. These should have been cleared before 01.07.2015 - obviously many refund claims are pending.
All you have to do to avail the scheme is
1. to file a certificate from the statutory auditor in the case of companies, and from a chartered accountant in the case of assessees who are not companies and an undertaking, in addition to other documents required to be filed along with the claim.; and
2. file an undertaking.
Now here is the catch:
What is the Chartered Accountant required to certify? He has to certify that:
1. The refund claim is complete in all aspects with all the relevant documents and has been filed within the prescribed time limit.
2.The amount claimed as refund is correct as per their books of accounts and relevant records and the same is in accordance with the provisions of rule 5 of the CENVAT Credit Rules, 2004, read with the notification no. ____________ issued thereunder.
4. The claimant is eligible to take CENVAT credit in terms of the CENVAT Credit Rules, 2004, for the amount which is being claimed as refund.
5. The services which are claimed to be exported, qualify to be treated as exports in terms of the rules in force at the time of the said export.
Which Chartered Accountant is going to give this kind of certificate? Whether an assessee is eligible for credit, whether they satisfy all the rules and notifications, whether a particular transaction amounts to export are all legal issues on which the Department has to adjudicate. How can the CA take the role of the Departmental adjudicator?
If a CA gives you that certificate, you can get a provisional refund of 80% of the amount claimed within five days. But don't rush to claim this provisional refund. If the department feels that your refund was wrong, they will issue a notice and if the demand is confirmed, you will have to return the money to the Government with interest ranging from 18 to 30%. Borrowing money at such high interest rate may not be a wise business proposition.
Let us congratulate the Board for this scheme which is claimed to be aimed at 'ease of doing business' and let us hope that happens. The field is notorious for frustrating all good aims of the Board and Government with consistent disobedience of Board instructions. Let us hope this scheme is successfully implemented and some refunds are actually given. Many officers feel that there is an unwritten ultimate law that "thou shalt not refund".
Today we bring you two articles on this subject from two distinguished advocates who are also qualified chartered accountants. Please see our Guest Column 01 & Guest Column 02.
What about Central Excise?
A concerned Netizen wrote to us, "The circular is unfair as it is applicable only to Service Exporters and not to manufacturer exporters who are also crippled with the delay in refund under rule 5 of CCR, 2004.
It is therefore, requested that the Board issues a clarification that the Circular is applicable/ extended to manufacturer exporters too.
Within the same Board, why this discrimination?
CBEC Circular No. 187/6/2015-Service Tax., Dated:November 10, 2015