software services

[Madhavan iyengar]

X is a software company based in india and has exported services in fy 13-14/14-15/15-16 to its related party which is a separate incorporated company in europe and also claimed refund of input services under rule 5A as it satisfies all conditions

issue: Due to some international tax judgements in European union there is a upward revision in the pricing of all the earlier contracts and the foreign company has paid the additional amount in fy 17-18 after making calculations based on the judgements and this is a significant amount.

this additional amount which is received in march 18 in relation to earlier year contracts can it be held as export of services under gst and accordingly can refund of itc be claimed.

[KASTURI SETHI]

Yes, you can claim refund. You will have to link all the docs i.e. proof of revision of price retrospectively with contract /agreements and original invoices issued during the past period mentioned by you.

[Madhavan iyengar]

thanks sir

but there is no service performed during the year it is only consideration received

can department challenge it on the grounds that there is no export of service in the current year though other conditions are satisfied.

[Rajagopalan Ranganathan]

Sir,

In respect of your query my views are as under: -

The period involved is prior to 01.07.2017, that is, the date on which GST Acts came into force. I presume that since you have exported the service under rule 6A of Service Tax Rules, 1994 you would have complied with conditions specified there. Export of services is exempted from payment of service tax. TAx/duty paid on input services and inputs utilised for exporting the service can be claimed under Rule 5A of CENVAT Credit Rules, 2004. Since the exported service is exempted from payment of service tax, the reduction in serviced charges of the exported service will not affect the credit already availed by you and the claim for refund of the credit of tax/duty paid on input services/inputs will not be affected by such reduction service charges by your customer. This is my view.

[Madhavan iyengar]

sir

thanks for your reply with the relevant points.

however my query is with respect to where the services amount has increased and not reduced and the additional consideration is received in fy 17-18 as explained in the query

[KASTURI SETHI]

W.r.t Serial No.2 dated 6.1.18, the additional amount received is integrated (cannot be separated) with export of service performed in the past years. The department cannot challenge that it is not export of service.

[KASTURI SETHI]

Read dated 6.1.19 above.

[KASTURI SETHI]

I agree with the views of Sh.Rajagopalan, Sir. Claim for refund of the credit of tax/duty paid on input services/inputs will not be affected by such escalation service charges by your customer.

[Madhavan iyengar]

Thanks Sethiji and Rajagopalan sir

AI Summary

Export of services treated as integrated with prior performance, permitting input tax credit refund when additional consideration is paid. Additional consideration paid later for previously exported services is integrated with those past exports and can be treated as export of services for refund of input tax/CENVAT credits, provided documentary linkage (contracts, proof of retrospective price revision and original invoices) substantiate that the receipt relates to earlier export contracts and refund conditions are otherwise satisfied.