In continuation of previous articles, elaborating the difficulties in getting the refund claim under different services, we in this article are unveiling the problems existing in the Service tax refund mechanism under Services of purchase or sale of foreign currency, including money changing provided to an exporter in relation to export goods (Section 65(105)(zm)) &  (Section 65(105)(zzk)) and (i) Services provided in relation to collection of export bills, (ii) Services provided in relation to export letters of credit such as advising commission, advising amendment, confirmation charges (Section 65(105)(zm)). This complete scenario is being elaborated with the means of humorous poems and conversation between Johnny (an assessee) and his father but the main motive is to bring out the problems faced by exporters.

Johnny and Jill went up the hill, to get the refund order
Johnny came back with a lack
And Jill came hopeless after.

Presently, assesses are claiming refund orders under above mentioned Services and are experiencing vast intricacies in getting such refund orders. The refunds claimed by the assessees as against their exports are their Rights but are being refused by the departmental authorities on various arguments which are of no significance and worth less. Such reasons on which the department is refusing the refund claims on the said services are being written out hereunder as follows: –

Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

No Papa,

What’s the reason?

This papa: –

Johnny says:  I went to the department to get the refund for the above service availed by me in relation to export of goods, but department said: –

Johnny-Johnny go away,
Come again another day.
Your refund order has following Flay: –

The refund under Collection of export bills and letters of credit services such as advising commission, advising amendment, confirmation charges (Section 65(105)(zm)) will not be allowed as the pre condition to avail the refund claim is that the said services must be either provided by a Banking Company or a Financial Institution or a NBFC or a Commercial Concern or any Other Body Corporate. As there is no documentary evidence in this regards, the refund claim will not be allowed.

Johnny’s View:

This is just a means of requirement that can be neglected as it is a fact that if we are paying the collection charges in respect of export bills and letters of credit services then definitely the service received are related to export of goods and taking a liberal view the refund claims should be allowed. Further, the services received by us in this respect are received by these specified bodies only and we are enclosing the documentary evidences in this respect. Hence, the said conditions are cleared but the department does not agree and is denying the claims.

Johnny says:  I went to the department next day again with the corrections and further supporting but department said: –

Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: –

The refund under purchase or sale of foreign currency, including money changing provided to an exporter in relation to export goods as specified under Section 65(105)(zzk) shall not be allowed as these services were not received from either a Foreign Exchange Broker or a Money changer or an Authorized Dealer of Foreign Exchange. This is the prerequisite for claiming refund claim and hence refund claim will not be allowed.

Johnny’s View:

The issue as alleged by the department is not correct and is to be avoided. It is a fact that in India only a Foreign Exchange Broker or a Money changer or an Authorized Dealer of Foreign Exchange are authorized for purchase or sale of foreign currency including money changing. Hence, the refund claim is to be allowed in its entirety. Further, we are enclosing herewith the documentary evidences that these services are being provided by one of those specified authorities. The certificate of service provider is also enclosed.

Johnny says:  I went to the department next day again with the further corrections but department rejected saying: –

Johnny-Johnny go away,

You won’t get refund anyway.
It has following more flay: –

 

The conditions for availing the refund claim under money changing services as specified under Section 65 (105)(zm) are that the services shall be received and used by the exporter for export of the goods and further the assessee has not availed the CENVAT Credit of service tax paid. Further, the invoices issued by the money changer do not fulfill all the requirements specified under Rule 4A like category of service, Description of service, valid Invoice Number, Service tax rate, Service tax registration number and other alike things.

Johnny’s view: –

The view taken by the department is completely futile. We have already provided to the department the documentary evidences as regards the use of services for export of the goods. Further we submit that we have not claimed any CENVAT Credit as regards these services and we are rightly eligible for refund claim.

At the last, the view taken by the Department as regards the requirements of Rule 4A we once again submit that the department should adopt a liberal view in this regard, more to in the case of Rule 4A of Service tax rules requirements. Even the Rule has relaxed certain requirements for banking companies. Banks are Government undertaking. They work as per their documents and do not fulfill the requirements. Even the objection was not raised by audit party while conducting their audit. Moreover, in one of the case, the learned adjudication officer has allowed the cenvat credit on the basis of certificate issued by the bank. Following the same analogy, the refund should be granted as all the basic requirement of this refund scheme is fulfilled i.e. the service tax has been paid, the service is used for export goods and goods have been exported. Henceforth, the allegation of the department is pointless for disallowance of refund claim.

Fruitless again & again;

Johnny now in grief and pain!

Refund order now a dream;

His efforts have downstream!

In this article our sole endeavor is to picturise the problems faced by assesses in getting the refund order as against the services specified above. To represent the whole situation and to make it somewhat rhythmatic we have graced the article with humorous poems.

By: -CA. Pradeep Jain, Siddharth Rutiya

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