Refund on export of service

[samanthapudi venkaiah]

The dealer is dealing with 100% export of services.Thereis is un-utilised IGST ITC which the dealer claimed refund on export of services.Export Payments for export of services are received in subsequent month. Dealer applied refund for two months where there is Export Turnover and refund. As per the formula Net refund (A) =Net itc (B) XT.o of zero rated supply of goods (C) + T.o of zero rated supply of services (D) / Devided by Adjusted total turnover (E) (b).The Assessing authority interpreted rule 89 (4) (E) (b) and treated the services supplied for export for which considering is pending receipt as "Non-zero rated supply of services" as a result the quantum of refund is significantly reduced. Please provide if there are any notifications /clarifications/ Case laws in this regard.

[KASTURI SETHI]

Case laws or any other authority can be traced out only if you intimate the basis of 'non-zero rated supply of service' .

[Shilpi Jain]

It should not be treated as non-zero rated supply. A particular trunover which would become a zero rated supply on receipt of consideration cannot be given different treatments at different points of time.

It is either zero-rated or non-zero rated. Until the time exists to receive the consideration it cannot be treated as a non-zero rated supply.

Sometimes department needs to use common sense also to understand and everything cannot be shown by way of a circular or notification or a case law!!

[Ganeshan Kalyani]

I agree with the views of both the experts.

AI Summary

Zero-rated supply status for exported services must not be reclassified before receipt of payment, preserving refund entitlement.
The core issue is whether services exported for consideration received subsequently should be treated as zero-rated for refund of unutilised IGST ITC, or may be classified as non-zero-rated by the assessing officer while payment is pending, affecting the refund quantum. Experts assert that turnover that will become zero-rated on receipt of payment should not be reclassified as non-zero-rated for refund calculation absent clear basis.