100% EOU -Refund claim

[Guest]

Dear Sirs,

One of my friends is working in a BPO (call center) which is only 100% exported oriented.  They have no services rendered within the country.

 

This company has suffered from the heavy rate of attrition which has effected the non filing of refund claim for the service tax paid on input services availed for provision of outbound services.

 

They have not filed the refund claims from the year 2006-07 onwards.  They have very heavy amount of cenvat credit to the extent of Rs.1/- crore to Rs.1.5 crores only during 2006-07 to first half in 2008-09.

 

Now they want to file refund claims for the period from 2007-08 onwards.  

 

Is there is any chance of realising the above refunds beyond the period of limitation  of 12 months time after export of services.

 

Any distinguished case laws are available in support of their refund claims as their services were all exported.

 

Kindly help by giving some suggestion or providing any case law.

[ROHAN THAKKAR]

Dear Sir,

The  rebate of service tax can be granted by under Rule 5 of Export of Service Rules, 2005. In this regard, provisions of Notification No 12/2005 -ST dated 19-04-2005 needs to be complied with. 

Rule 5 of Cenvat Credit Rules, 2004,  states that 'Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, 

(i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or

(ii) service tax on output service,

and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification'

 

Thus, the refund will be allowed of the input credit only when the adjustment of it is not possible in making payment of duty of central excise on home consumption or for payment of service tax on outputservices in India. However, only circumstances will say that whether it is possible for the person to utilise the credit or not for payment of excise duty and/ or service tax duty. Hence, logically, the provisions of section 11B of the Central Excise Act, 1944 as made applicable to service tax vide section 83 of the Finance Act shall not be applicable. In this regard, the judgement of Hon'ble Chennai Tribunal in case of GTN Engineering (I) Ltd v Commissioner of Coimbatore, 2010 -TMI - 202608 - CESTAT, CHENNAI, also held the same view the extract of which is reproduced below:

'Refund of cenvat cedit on export - rejected by the original authority on the ground of time-bar – assessee claiming refund of CENVAT credit already taken by them which could not be utilized as they have accumulated due to exports as specifically provided under Rule 5 – Herld that: - Tribunal in the case of Swagat Synthetics and it was held that credit lying in RG-23A account accumulated arising out of export is akin to credit in the PLA and the time-limit shall not apply'

Apart from above, there are catena of Judgements in support of the above view.

Regards,

CA Rohan Thakkar

9228720536

 

[Shobhit Jain]

Dear Prakash,

I have the same issue as yours.

We are 100% EOU, and provides export services to Singapore.

EU Audit was conducted in our office in Dec 2012 and was asked to pay Service tax on import of services (under reverse charge) from period 2007 to 2012.

Now we are unable to claim refund of this Service tax, as the same is time barred.

Please assist. If you have any case law or other relevant notes, then please share.

Thanks

Regards

 

Shobhit Jain

+91 9220955615

AI Summary

BPO Company Seeks Service Tax Refunds for Unclaimed Credits Since 2007-08, Citing Rule 5 of Cenvat Credit Rules A BPO company, fully export-oriented, has not filed refund claims for service tax on input services since 2006-07 due to high employee turnover. They have accumulated significant CENVAT credit and seek to file refund claims from 2007-08 onwards, questioning the possibility of obtaining refunds beyond the 12-month limitation period. A reply suggests that refunds can be granted under Rule 5 of Export of Service Rules, 2005, and Rule 5 of Cenvat Credit Rules, 2004, when adjustment is not possible. Another participant shares a similar issue with time-barred refund claims for service tax on imported services.