‘Relevant Date’- A Relevant amendment and a ‘Big Leap’ for the Service Exporters for claiming refunds

[SKP IDT]

Bingo! The Extra day of this ‘Leap Year’ has certainly provided a big leap to service exporter’s joy and delight, as the most contentious  and dubious issue of ‘Relevant Date’ for filing refund claim has been put to rest through the necessary amendments in Notification no. 27/2012-C.E (N.T). dated 18-06-2012.

“Export the Goods/Services and not the taxes” is the real motto of the Government to promote the cross-border trade from India and accumulate sufficient foreign exchange reserves. Accordingly, in order to make the Indian service exporters competitive in international market and to incentivise them, refund of the service tax/excise duty/custom duties (CVD and SAD) paid on procurement of inputs and input services used in exportation of goods/services are sanctioned, subject to fulfillment of certain conditions. One of the conditions specifies that the refund claim should be filed within one year from the “Relevant Date’. The relevant date means the date from which the time of filing of refund should be considered i.e. the date from which refund can be filed.

However, time limit to file the refund claim i.e. ‘Relevant Date’ has always been a bone of contention ever since the introduction of refund scheme. Further, services being intangible in nature, it is more cumbersome to determine the relevant date in the absence of un-ambiguous and specific provisions. There are prolonged litigations pending on the subject matter for deciding what would be the relevant date in case of export of services viz.

• Date of issuance of invoice; or
• Date of receipt of payment; or
• Date of completion of Services

It has always been the case of assessee to consider the relevant date as date of receipt of payments, whereas revenue always contended it to be date of issuance of invoice.  There are divergent judgements, some in favour of the assessee and some in favour of revenue. Different Appellate authorities have given different judgements both allowing and denying the claims of assesses on this subject. In order to illustrate the same, we refer to some of the important judgements below:

• In Bechtel India Pvt. Ltd. V. Commissioner of Service Tax , the Hon’ble Delhi CESTAT while applying the provision of erstwhile export of service rules had held that export of services is completed only when all conditions for export of service in terms of the Export Rules are fulfilled. Accordingly, relevant date for the calculation of limitation period in case of export of service was held to be the date of receipt of payment in foreign convertible exchange. Similar view was held by the Hon’ble Mumbai CESTAT in case of CCE versus Eaton Industries P. Ltd. [2010 (12) TMI 71 - CESTAT, MUMBAI] and Clearpoint Learning Systems (I) P. Ltd. versus CCE [2015 (6) TMI 749 - CESTAT MUMBAI].
• However, in  case of “Affinity express India Pvt. Ltd. Vs CCE, [2014 (6) TMI 593 - CESTAT MUMBAI]” where Hon’ble Mumbai CESTAT held that ‘relevant date’ for determining the period of limitation will be the date of export of services or date when the invoices are raised and not the date of receipt of payment.

Thus, in order to rationalise the tax provisions with key focus on amending ambiguous provisions and provide assesse-friendly approach, the Government has now provided much needed clarification through  introduction of specific provisions/changes in relation to ‘Relevant Date’ vide Notification no. 14/2016-C.E. (N.T.) dated 01-03-2016 (amending NN. 27/2012-C.E. dated 18-06-2012) which are as follows. The refund claim has to be filed within one year as per conditions mentioned in below table:

Cases	Relevant date
If provision of service completed before receipt of payment	Refund application has to be filed within 1 year from the date of receipt of payment in convertible foreign exchange
If  payment received in advance before issuance of invoice	Refund application has to be filed within 1 year from the date of issuance of invoice

With these changes proposed w.e.f. 01-03-2016, more time will be available to the service exporters to file the refund claims with the Authorities. The intention of the Government (to promote export) has now been duly incorporated in the notification itself, absence of which was causing unwanted litigation and hurdles. It would be interesting to see some more “Ache clarifications” like these in the near future bringing more “Ache Din” for exporters, industry, other stakeholders and economy at large.

The authors are CA Jigar Doshi – Partner, CA Lucky Ahuja – Manager and CA Ashish Sodhani – Senior Executive from SKP Business Consulting LLP and the above views are personal in nature.