REBATE CLAIM

[pradip patwardhan]

Dear Experts

We are as an Exporter regularly file service tax rebate claim under notification 41/2012-ST in resect of service tax paid on input service of Business support service and clearing and forwarding service. We have been regularly receiving the rebate claim since last 3 years but now the department new officer is of the view that the amount of service tax paid to our service provider has been recovered by us from importer (our buyer) as it is subsequently included in the invoice value and hence Show cause notice issued by the dept.and asked to why the claim amount should not be rejected.

Kindly post your valuable reply on above matter urgently....

Thanks & regards,

Pradip Patwardhan

Maharashtra

[Rajagopalan Ranganathan]

Sir,

It is the policy of Government of India only services are to be exported and not service tax paid on input service. Since you are availing credit of service tax paid on input services as credit, according to principles of costing, such service tax paid on input service cannot form part of transaction value of service exported. Therefore the contention of the officer that you have collected the service tax paid on input service from the importer of service is not tenable. Therefore if any show cause notice on the above ground is not maintainable in the eye of law.

[ashish chaudhary]

The intention of Notification No. 41/2012-ST is to allow refund/rebate of those services which have been used beyond the place of removal as Cenvat Credit cannot be allowed for the services used beyond place of removal. If services which have been claimed as rebate have been utilised beyond place of removal, there can not be denial of rebate/refund. On the other hand, if services have been used upto place of removal, credit can be claimed as input service and refund may be claimed under Rule 5 of CCR. Rebate may not be granted on such service.

This issue has mainly arisen recently after clarification issued by Board regarding meaning of "Place of Removal" in case of export.

If you are manufacturer, suggested to take input credit of services upto place of removal (which is considered port in case of export) and file rebate claim for services beyond place of removal (practically very few services left). You could also consider going for fixed percentage of rebate under 41/2012-ST and claiming credit of services upto place of removal.

AI Summary

Export rebate on input services limited; entitlement depends on use beyond place of removal and Cenvat credit treatment. Dispute over Notification 41/2012 ST rebate: department alleges input service tax was recovered via invoice inclusion; experts reply that only services, not service tax, are exported, and Cenvat credit of input service tax cannot form part of the exported service's transaction value. Services used up to the place of removal should be taken as input credit, while services used beyond that point may be eligible for rebate; alternate approach is claiming fixed percentage rebate under the notification.