Johnny and Service Tax Refund [Series- II] Part 4: ‘Conditions relating to Claim of Rs. 500/-’

[Pradeep Jain]

By: -                          

 CA. Pradeep Jain

Mayank Palgauta

 Visit us at: www.capradeepjain.com

 To prolong the series of the articles on Refund claims to exporters we here under this article are expressing the miserable situation of exporters claiming refund claims for service tax paid on services used in export of goods. This is the fourth article in a row of this series of articles. In the previous three articles we had elaborated the difficulties faced by the assessees in getting the refund claim under Invoice, CHA services and Port services.

In this fourth article we are attempting to present the grounds on which departmental authorities are disallowing the refund claims relating to "Amount of 500/-" against the services on which refund has been claimed. This complete state of affairs is humorously picturized by the way of poems and conversation between Johnny (an assessee) and his father. This Endeavour is just to bring out the problems faced by exporters.

 Johnny and Jill went up the hill, to get the refund order
Johnny came back with a lack
And Jill came hopeless after.

Presently, assesses are claiming refund orders on the various services which are specified in the Notification No. 17/2009-ST dated 07/07/2009. The refunds claimed by the assessees as against their exports are their constitutional rights but are being declined by the departmental authorities alleging that the assessee has filed the claims in which the service tax paid amount is less than Rs. 500/- which is highlighted as under: -

 Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

 No Papa,

What's the reason?

This papa: -

 Johnny says:  I went to the department to get the refund for various specified services but department said: -

 Johnny-Johnny go away,

Come again another day.

Your refund order has following Flay: -

 The claims of refund made in respect of Various Specified Services are not admissible to us as "we have claimed refund of service tax paid in respect of services (for example CHA services, Cleaning Services, Courier Services, Transportation Charges etc.) where service tax paid is less than Rs. 500/- as such, the said claims are not admissible for refund in view of the provisions of said notification."

Johnny's Submission: -

In respect to the above allegation, we submit that this is a totally wrong allegation raised by the learned adjudicating authority because it is mentioned in the notification 17/2009-ST that-

(h) no refund claim shall be allowed if the same is for an amount less than rupees five hundred;.

 Here the refund claim means a total of all the invoices filed for the refund claim. The clause specifies that when any refund claim for the services utilized in the course of export to be filed, the total claim should not be below Rs. 500/-. Our refund claim, for the services used in the course of export of goods, is also more than Rs. 500/-. Therefore refund cannot be denied to us taking such contentions.

 Further the Notification's point No. 2 clause (b) says that service tax exemption will be claimed by the manufacturer- exporter on the services availed during the course of export in "Form A-1". The Form A-1 also starts with the-

I/We claim refund of Rs........... (Rupees in words) under Notification No.17/2009-ST. Dated 07.07.2009 in respect of service tax paid on services used for export of goods

 The starting para of the Form A-1 clarifies the intention of the Government that the refund has to be seen "in total". If the same was not the intention of the Government there was no need to start the form like this.

 Further the format that is prescribed in the Form A-1, annexure to the Notification also give the columns as S. No. Details of the goods exported on which refund of the service tax has to be claimed etc. There are a number of details require in the table which shows that the refund will claimed in total only.

 Johnny says:  I went to the department next day again with the above submission but department said: -

Johnny-Johnny go away,

Come again another day.

Your refund order has following more flay: -

In next time the Learned Adjudicating Authority came with a new and unlike approach saying that the instead of seeing all the invoices as a total claim, individual invoice of the service provider forms a single claim of refund in terms of notification no. 17/2009-ST and so the limit of Rs. 500/- shall be seen per invoice rather than per shipping bill or per claim.

Johnny's Submission: -

In this respect it is submitted that the lower limit of Rs. 500/- as prescribed in the notification should be of the total claim as reflected by the language of notification. The notification no. 17/2009 uses the word "refund claim" or the "claim of refund" at various places. There is no doubt that all the conditions prescribed in the notification applies to this claim of refund. If the contention of the Learned Authority is accepted that the claim of refund should be seen per invoice of service provider, it would exclude the small/emerging exporters who has individual invoice with less than Rs. 500/- but if this is seen in total then constitute the higher amount from aforesaid limit. Further, the refund claim means the total claim filed by the exporter in respect of each invoice / shipping bill. This is clear from the language of the notification also which says as follows:-

"(f) the claim for refund shall be filed within one year from the date of export of the said goods."

 

The above condition mentioned in the notification says that the refund is required to be filed within one year from the date of EXPORT of the SAID GOODS. Thus, the refund has been linked to the goods exported, so the limit is to be seen with respect to the said goods/said consignment. Thus, the refund is to be linked to the shipping bill.  If the intention of the government was to link the refund claim to the availment of a particular service, the language of the notification should have said something like "refund shall be filed within one year from the date of availment of the service". Therefore, looking to the intention of the government, the lower limit of Rs. 500/- should be seen in reference of atleast one shipping bill instead of one invoice of service provider and as such the contention of the Learned Authority is not tenable and is not acceptable.

Johnny says:  I went to the department next day again with the above intent submission but department said: -

 Johnny-Johnny go away,

Come again another day.

Your refund order has following more flay: -

 Further distinct accusation is being raised via order of Learned Authority which is passed saying that Proviso (b) to Paragraph 1 of the Notification provides that the exemption claimed by the exporter shall be provided by way of refund of service tax paid on the specified service tax paid on the "specified service" used for export of goods. Here in the provision, the word "service" is being used which is a singular form and therefore more than one service are not eligible for refund claim. Each service is to be claimed individually by the exporter.

 Johnny's Submission: -

 We submit that the above allegation is totally wrong as the proviso (b) to the first paragraph says-

"the exemption claimed by the exporter shall be provided by way of refund of service tax paid on the specified service used for export of the said goods"; 

 The word specified service used here is for the services that are mentioned in column (4) of the said Table. Nowhere in the table there is a condition for each service that are specified there that the refund claim should be not less than Rs. 500/-. Therefore the condition is not prescribed for any specified service but is for the whole of the refund claim. Whenever the amount of Rs. 500/- is to be considered it is considered per shipping bill.  The shipping bill under which the export is made and refund claim is filed, the total refund claim of such shipping bill should not be less than Rs. 500/-. All the services that are charged separately will not be considered separate for the refund claim but the total will be taken according to the claim per shipping bill.

 Further the starting para of the Notification says that the refund claim will include the services prescribed in the column 4 of the table mentioned in the Notification. So the individual service taken does not make a refund claim. Therefore the order passed by the learning Adjudicating Authority saying that the individual invoice of the service provider forms a single claim of refund is totally erroneous.

Even if the contention of the Learned Authority, that the refund should be per service, is accepted for the sake of argument only, then also a refund claim will be meant as all taxable services. As in the latest decision of Tribunal in case of M/s Sri Venkateshwara Precision Components Vs CCE, Chennai (Dated: August 9, 2010) it is held that-

Central Excise - CENVAT credit on goods procured from 100% EOUs - CVD referred under Rule 3(7) of the CENVAT Credit Rule 2004 includes not only additional duty under Section 3(1) of the Customs tariff Act, 1975, but also the 4% Additional duty levied under Section 3(5) - As per the General Clause Act, when the context requires the word used in singular can mean in plural and, therefore, the term CVD can mean the two CVDs. : CHENNAI CESTAT;

 In the above mentioned case it is decided that if the governing body is not clear for the meaning of a term than the term used in a singular form can be used in plural form as according to the General Clause Act. Therefore it is clear that in case where the word used in singular term than it can mean in plural. The ratio of this decision is applicable in our case also and the word service will be reckoned as all taxable services as in the plural form. In light of the above decision the refund should be allowed to us.

But at the end the outcome was the same as always comes out which can be shown by the following lines: -

Fruitless again & again;

Johnny now in grief and pain!

Refund orders now a dream;

His efforts have downstream!

 Although the article is ornamented with humorous poems but the key motive is to bring into light the intricacies involved in the refund orders. With this entertaining and rhythmical article we summarize that the present situation and mental state of assesses alleging refunds against export of goods is alike to the situation of Johnny as pointed out in the poem.

 Still numbers of conditions are remaining to be decorated subject to which the refund is allowed. The assessee is facing difficulty in almost all of those conditions. Due to the large number of conditions we were not able to cover all the remaining conditions in this article and hence we will be bringing further articles on the different conditions covered therein.

 Keep visiting for the next article....