|We are a Practising Chartered Accountants firm practising in the field of Indirect Taxes. Recently we came across a comment on us that Indirect Tax practitioners are not Humorous and correspondence with them is boring. Taking this comment as inspiration and a stepping stone we have drafted an article titled "Johnny and Service Tax Refund Part - I". The content of the articles is as under: - |
Johnny and Service Tax Refund Part - I
CA. Pradeep Jain
With the help of this article an effort has been made to picturise the present situation existing in the refund structure mechanism under Service tax. This state of affair is elaborated with the means of poems and conversation between Johnny (an assessee) and his father.
Johnny and Jill went up the hill, to get the refund order
Johnny came back with a lack
And Jill came hopeless after.
Today, in the present scenario the assessee is facing enormous difficulty in getting refund orders as stated in the lines above. The refund claims are the Right of the assessee but the department is rejecting these claims on various grounds which are of trivial importance. This result in frustration and skepticism among assesses as regards the Refund mechanism. The various reasons on which the department is rejecting the refund claim as against the "Transport of Goods by Road Service" u/s 65(105)(zzp) are highlighted here by means of poetic conversation: -
Johnny-Johnny! Yes papa!
Got the refund?
What's the reason?
This papa: -
Johnny says: I went to department to get the refund for GTA service but department said: -
Johnny-Johnny go away,
Come again another day.
Your refund order has following Flay: -
1. The documentary proof of discharging service tax liability under transportation of goods by road service classifiable under section (105) (zzp) has not been submitted. The liability to pay service tax is on the manufacturer and as such you should have paid the service tax and produced the challan for the same. If the transporter has paid the service tax then you will not get the refund claim as liability to pay service tax is on you only. Rather than getting refund, you will receive a demand from the department. It is like "CHOBE JI GAYE CHHABE JI BANANE AUR DUBEY JI RAH GAYE."
2. The Exported goods have not been transported directly from the place of removal to inland container depot or port or airport, from where they are to be exported. The transport of goods from factory to ICD is added from 19/02/2008 and from ICD to port from 17/09/2007. As such, you will get refund from such date (i.e. 19/02/2008) only and not prior to that date. Your contention that it has retrospective effect does not hold good as the notification does not contain any such clause.
3. Invoice issued doesn't contain the name of the inland container depot or port or airport from where the goods are exported and hence the documents are not proper. Moreover, the consignment note (popularly known as "Bility" in trade) does not contain all the details required under Rule 4B of Service Tax Rules. It does not contain the truck number and as such refund can not be granted to you.
Johnny says: I went to the department next day again with the corrections but department said: -
Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: -
1. The transportation charges are received without service tax and the relevant documents confirming payment of service tax to Govt. have not been properly submitted. The liability to pay service tax is on you in case of transport of goods by road and as such you should have paid the service tax. If the transporter has paid the same then also you will not get refund. As told earlier, we will issue a demand to you.
2. Lorry Receipt and corresponding shipping bill doesn't contain details of exporter's invoice relating to export goods,
3. The drawback on the said service has already been claimed. Your contention that the notification says that drawback rates should not have included the specified services. The rates are fixed by Government and he knows that whether these are included or not. As you are not aware whether these are included or not, we also do not know whether these have been included or not. The burden is on you to prove the same that these are not included if you intend to claim drawback. Moreover, your contention that Drawback Rules says that only input services are included. The "input services" have same meaning as given under Cenvat credit Rules. As the department has disallowed credit on outward freight and as such the drawback is not included. Hence the drawback rates have not included the service tax paid on outward freight. This is not correct. The Cenvat credit is allowed on outward freight by Punjab and Haryana High Court in case of M/s Ambuja Cement Ltd. v/s Union of India & Ors. [2009 (236) ELT 0431 (P & H)]. Although we are not agreeing the same in case of demand but we follow the same while granting the refund. Further, the condition of drawback is waived from 7.12.2008 and as such the refund will be granted from that date but it does not have retrospective effect. When the law is clear there is no place for intentions. If the intention of the Government was to give you relief they should have straight forward granted exemption rather then exemption by way of refund with so many conditions.
Johnny says: I went to the department next day again with the further corrections but department rejected saying: -
Johnny-Johnny go away,
You won't get refund anyway.
It has following more flay: -
1. The declaration, as to whether such GTA service has been received from the service provider for purposes other than for export, is not enclosed along with the refund claim.
2. That the services are not covered in the specified services and and evidence regarding non availment of Cenvat Credit is not enclosed in the refund claim.
3. that the bills of Goods transport agency are not issued by GTA but are issued by CHA and as such the documentary evidence is not suffice;
Fruitless again & again;
Johnny now in grief and pain!
Refund order now a dream;
His efforts have downstream!
By this humorous and poetic article above we conclude that the physical condition and mental state of assesses claiming refunds against export of goods is similar to that of Johnny in the poem. Every time the assessee is approaching the department his refund claims are being rejected on some or the other flaws. He has to return fruitless, hopeless with his futile efforts thinking whether he will be getting the refund or not.
There are a number of services on which the refund is allowed. The assessee is facing difficulty in almost all of those services. Due to the large number of services we were not able to cover all the services in this article and hence we will be bringing further articles on the different services covered therein. Keep visiting for the next article……..