Refund of Cenvat Credit for Services taxed under Reverse Charge (Rule 5B) – Part 2

[Dr. Sanjiv Agarwal]

Period and Time frame of Claim 

Refund of unutilized Cenvat credit taken on inputs and / or input services shall be claimed on a half yearly basis. Refund claims are required to be submitted in prescribed ‘Form-A’ to the jurisdictional Assistant / Deputy Commissioner of Central Excise, as the case may be, before the expiry of one year from the due date of filing of return for the half year. However, since the notification has been issued late, it has been provided that last date of filing of refund claim in ‘Form-A’ for the period commencing form 1^st July 2012 to 30^th September, 2012 shall be 30^th June, 2014. No refund shall be admissible for the Cenvat credit taken on inputs or input services received prior to 1^st July 2012.

Thus, refund claims for different periods can be filed as under:

Period	Due date of return	Latest by
Prior to 1st July 2012	-	No refund
1st July 2012 to 30th September 2012	30th April 2013	30th June, 2014
October 2012 to March 2013	10th September 2013	25th April, 2014
April 2013 to September 2013	25th October 2013	25th October, 2014
October 2013 to March 2014	25th April 2014	25th April, 2015

For this purpose, assessees should note that following conditions must also be complied with –

1. Only one refund claim should be submitted and assessee shall not submit more than one claim for every half year under this notification / rule 5B.
2. Filing of return is compulsory and refund shall be filed after filing Service Tax return. If no return is filed, no refund claim is allowed and if filed, may be rejected.
3. Half year would mean a period of six consecutive months with first half year beginning from 1^st April every year and second half year beginning from 1^st October every year.
4. If more than one return is required to be filed for any half year, the time limit of one year shall be ascertained from due date of filling of return for later period. Thus, where, say, two quarterly returns are required to be filed in any half year, one year shall be computed from end of due date of filing second quarter return.
5. Refund claim should be accompanied by copy of respective half yearly return for which refund is being claimed.

Refund Amount Computation

For claiming refund under rule 5B of the Cenvat Credit Rules, 2004, amount shall be computed as under:

Unutilised CENVAT credit taken on inputs and input services during the half year for providing partial reverse charge services

=

(A)

–

(B)

Where,

A	=	CENVAT credit taken on inputs and input services during the half year	(*)	turnover of output service under partial reverse charge during the half year
				total turnover of goods and services during the half year
B	=	Service tax paid by the service provider for such partial reverse charge services during the half year;

The refund amount shall be subject to following further conditions:

1.  the refund of unutilised Cenvat credit shall not exceed an amount of service tax liability paid or payable by the recipient of service with respect to the partial reverse charge services provided during the period of half year for which refund is claimed;
2. the amount claimed as refund shall be debited by the claimant from his Cenvat credit account at the time of making the claim;
3.  in case the amount of refund sanctioned is less than the amount of refund claimed, then the claimant may take back the credit of the difference between the amount claimed and the amount sanctioned;

Application for Refund

The notification prescribes ‘Form-A’ for application for refund of Cenvat credit under Rule 5B of Cenvat credit rules which is to be filed for each half year separately. It will contain particulars of output services provided and Service Tax liability of the service provider and the service recipient during the relevant period –

1. Description of service
2. Value of output services provided during the half year
3. Total Service tax liability during the half year
4. Service tax liability discharged by the provider of output service during the half year
5. Service tax liability of the receiver of such output service during the half-year [Column( iii)–Column (iv)]

It will also contain following particulars of the amount eligible for refund at the end of each half year  -

1. Service tax liability of the receiver of such output service during the half-year (total of column 5 of above table)
2. Amount of unutilised Cenvat Credit taken on inputs or input services during the half year for providing services taxable under partial reverse charge [as calculated in para 1(a) of the notification].
3. The eligible refund amount (minimum of  column (ii)  and (iii)

'Form-A' will also contain particulars of bank account where in refund amount may be credited and a declaration to the effect that –

1. Particulars are correct
2. Satisfaction of all conditions as contained in Rule 5B and notification
3. Being rightful claimants of refund under rule 5B
4. Being authorized person to file refund claim on behalf of assessee
5. No other refund claim having been or to be filed under rule 5B for same half year.

Action on Application

The Assistant Commissioner or Deputy Commissioner to whom the application for refund is made may call for any document in case he has reason to believe that information provided in the refund claim is incorrect or insufficient and further enquiry needs to be caused before the sanction of refund claim. At the time of sanctioning the refund claim, the Assistant Commissioner or Deputy Commissioner shall satisfy himself or herself in respect of the correctness of the refund claim and that the refund claim is complete in every respect. After due verification and scrutinizing with records, refund shall be sanctioned and released.  The refund claim may also be sanctioned partly and balance rejected.