Refund scheme to exporters was introduced by notification no. 41/2007 dated 6th Oct 2007. The scope of refund was enhanced from time to time along with the procedural changes. To make the scheme simple and ensure speedier disposal, two notifications 17-2009-ST and 18-2009-ST have been issued on 7th July 2009 superseding the earlier scheme.
The notifications grant benefit in either of the two ways to services used for export; by way of exemption or by way of refund.
1. Exemption Scheme
1.1. What are the services covered?
The services covered under exemption a) Transport of goods by road and b) services provided by a foreign commission agent for procuring sales orders
1.2. What are the conditions for exemption?
a) Exemption for above services is provided only where the recipient exporter is liable to pay tax on a reverse charge basis. This will reduce unnecessary burden on the exporter to first deposit tax as service receiver and then claim refund of the same.
b) In case of commission paid to foreign agent, the same should be reflected in shipping bill/ bill of export. Further the exemption is limited to 1% of FOB value of the goods. In case of a higher claim, the exporter is denied any exemption/ refund of the excess amount paid. (TRU letter 334/13/2009 dated 06-07-09)
c) Exporter should have Import Export Code (IEC) and should be registered with Export Promotion Council sponsored by Ministry of Commerce or Ministry of Textiles.
1.3. What is the procedure to claim exemption?
· Exporter needs to inform in form EXP-1 to the AC/DC before claiming exemption.
· The consignment note, invoice etc. should be in the name of exporter and reflect that exporter is liable to pay tax.
· Exporter needs to file half yearly EXP-2 return within 15 days of end of six months along with following documents pertaining to export:
o Certified original copies of invoice, bill, consignment note etc.
o Original proof of payment of commission,
o Certified copy of agreement with the commission agent.
o Self attested copy of shipping bill/ bill of export
o Self attested bill of lading / airway bill
· Certification shall be done by proprietor/ partner and in the case of a company by the person authorized by the Board of Directors.
· A certificate to the following effect needs to be given with the return:
a. The taxable service to which the document pertains has been received by the exporter.
b. The service has been used for export of goods.
c. Service tax payable thereon has been paid.
d. Taxable service has been used for export of goods as referred in the shipping bill(s).
1. Refund Scheme
Exemption is granted under notification 17/2009 from whole of service tax leviable u/s 66 and 66A by way of a refund claim.
1.1. Scope
1) Who is eligible to claim refund?
An exporter receiving specified services is eligible to claim refund under the notification. The exporter is required to be registered with Export Promotion Council sponsored by Ministry of Commerce or Ministry of Textiles and hold Import Export Code(IEC).
2) Can a service provider claim benefit of this refund?
No, the refund scheme is available only to a service recipient and that too in form of a refund.
3) Is refund of all services granted under this scheme?
No, refund is allowed only to those services which are specified in the table attached to notification.
4) Can an exporter take full claim of service tax paid on specified services availed by him?
No, claim for refund can be claimed of only those specified services which are used for export of goods and not in respect of specified services used for non-export purposes. For example refund will be granted of only those courier expenses which are used in respect of export goods and not of those used in domestic sale.
5) What is the amount of refund granted to an exporter?
Only the amount actually paid to a service provider by the exporter is allowed as refund.
6) Can CENVAT be claimed of the amount sought as refund?
CENVAT credit of tax claimed as refund is not allowed as this will tantamount to double benefit to the exporter.
1.2. Procedure
7) Before which authority the refund claim is to be filed?
Refund claim of service tax paid on specified service is to be filed before jurisdictional Assistant Commissioner/ Deputy Commissioner.
8) What is the form used for filing refund claim?
Refund claim in is filed in Form A-1 by both manufacturer- exporter and merchant- exporter.
In addition, merchant exporter is required to file a declaration in Form A-2 and after verification of the same within seven days, the AC/DC will grant a service tax code (STC) to the exporter.
9) What is the time limit for filing the refund claim?
Claim is to be filed within one year from the date of export of the said goods, i.e. the date on which the Customs officer gives “let export order”.
10) Can a person who has failed to file refund within time limit as per erstwhile 41/2007 (six months from date of export) file the same under new notification 17/2009(one year from date of export).
No, the same cannot be filed now in light of specific exclusion in the notification as “except as respects things done or omitted to be done before such supersession” . Thus refund for Dec-08 quarter which was to be filed by 30th June 2009 cannot be filed under the new scheme.
11) Is there any ceiling for filing refund claim?
Yes, the refund claim should not be less than Rs. 500.
1.3. Documents
12) What are the documents required to be filed with the refund claim?
Following documents are required to be attached with the refund claim
· Certified original copies of invoice, bill, challan in the name of exporter showing payment for services availed and service tax payable.
· Self attested copy of shipping bill/ bill of export
· Self attested bill of lading / airway bill
· In addition, documents specified in the table to notification with respect of specified services also need to be submitted.
Can the exemption under ntfn.18/09-st is admissible for the exports made prior to 07-07-2009 and agent commission claimed the commission subsequently i.e after 07-07-2009 ?