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Johnny and Service Tax Refund Part - III

CA. Pradeep Jain

Siddharth Rutiya


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In continuation of the series of previous two articles, elaborating the difficulties in getting the refund claim under GTA service and Port services, we in this article are attempting to present the problems existing in the Service tax refund mechanism under Technical testing and analysis Services (Section 65[105][zzh]). This complete state of affairs is humorously picturisead 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.

The assesses claiming refund orders under Technical testing and analysis Services are facing enormous complexities in getting their refund orders passed on futile and negligible grounds that not only harass the assessees but also deprives away the faith of assessees on the refund mechanism. These enormous reasons on which the department is refusing the refund claims on the said services are being projected hereunder as follows: -


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 Technical Testing and analysis service but department said: -

Johnny-Johnny go away,
Come again another day.
Your refund order has following Flay: -

You have not submitted the written agreement as regards the said service. This is a prerequisite for availing the benefit of refund claim.

Johnny's View: 

This is just a means of requirement that can be neglected as it is a fact that if there is any statutory requirements of the Foreign law for technical testing and analysis then we the assessees are unable to bring out the same to your good honour and hence there can't be any written agreement in such respect. But as this service is related to the export of goods the refund ought to have been granted.

Further, this is a set philosophy that no exporter will carry out the technical testing and analysis service from a third party until and unless there is a requirement of same from the foreign buyer's point of view. This further clarifies the situation and makes it ample clear that the said requirement of submitting the written agreements is just a presupposed condition which can be avoided. But the department does not agree.

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: -

The date of technical testing and analysis report of the samples are post dated from the dates on which the export goods were sent to the buyer. Hence, this construe that the samples were sent prior to the date of Technical testing and analysis report and as such this service availed by the exporter is not in respect of goods exported and therefore the refund is rejected.

Johnny's View:

The dates of testing report is post dated as regards the date of consignment of goods to the buyer because the goods after being tested were sent to the buyer and as it was assured on our part in respect of quality of the goods that the same will clear out all the testing we sent the goods to the buyer. This was due to the fact that there was urgent need of the buyer. We normally take out the sample from the consignment and keep it for 6 months for any future claims. We took out the sample and sent the consignment and then send it to concerned lab for testing. The test report has come before the consignment reach the foreign buyer. Thus, the complete scenario clearly picturizes that the service of technical testing and analysis availed by us was directly related to the exports made by us and there is nothing which leads to distrust of this fact. Further, the correlation with export is established from the fact that the Service tax invoice has reference of Report. The report has reference of Batch number. That batch number also appears in shipping bill. Thus, it is clearly established that the technical testing and analysis service is taken for this particular consignment only.


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: -


The invoices issued by you do not fulfill all the conditions specified under Rule 4(a) like category of service, Description of service etc. and in addition to this the batch number written in the invoice do not match with the batch number as is specified in the technical testing and analysis report. This further leads to the conclusion that the testing and analysis work carried out is no way connected with the goods exported and as such the refund is disallowed.


Johnny's view: -

Firstly, the Department is interpreting the legal language very strictly whereas the department should be liberal in this aspect, more to in the case of Rule 4A of Service tax rules requirements. Non compliance of the Rule 4A is not of great concern and there should be a practice to avoid allegations if the Rule 4A is not complied in its entirety.

Furthermore, the department's contention that the batch numbers do not match with those specified in the testing report is also no great concern. Just on the behalf of the Batch number it can't be interpreted that the testing and analysis services weren't used in respect of export of goods. These batch numbers are entered manually in the invoices and there are great chances of errors in this respect. Henceforth, the allegation of the department is futile for disallowance of refund claim.


Fruitless again & again;

Johnny now in grief and pain!

Refund order now a dream;

His efforts have downstream!


Via this article the sole endeavor is to picturise the problems faced by assesses in getting the refund order as against the Technical testing and analysis services. To represent the whole situation and to make it somewhat rhythmatic we have graced the article with humorous poems.

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.

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……..


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