Refund claim - export of services

[Guest]

Following is my queries. •Do I entitle to claim the refund on all input services which has been availed for exporting the goods if there is no domestic sales under Rule 5 of Cenvat Credit Rule, 2004. •Assuming we have made domestic sales during the year. What would be the position if I have made export sales as well as domestic sales? •What would be the impact of Notification no. 41/2007–ST dated 6-10-2007?

[Sandeep Garg]

In case of export, you can claim refund of service tax paid on input services under rule 5 of the Service Tax Rules. In case you are having domestic billing, you can utilised total input credit to pay service tax on domestic billing.

[Mukesh Kumar]

Though I agree with the view of Mr. Niranjan Gupta, but the rule 5 is applicable only if your either engaged in Manufacturing of excisable goods or providing taxable services. If you are engaged in trading activity or to say merchant exporter, you have no option but to file a refund claim under notification no. 41/2007.

AI Summary

Refund of input service tax: exporters may claim under Rule 5, while merchant exporters must use the notification route. Exporters can claim refund of service tax on input services under Rule 5 when engaged in manufacture of excisable goods or providing taxable services; if domestic taxable supplies occur, input credit may be used to pay domestic service tax. Traders or merchant exporters not covered by Rule 5 must seek refund under Notification no. 41/2007 ST.