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Johnny and Service Tax Refund Part - V


-CA. Pradeep Jain

Siddharth Rutiya


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In continuation of previous articles, structuring complicatedness involved in getting the refund claim under GTA service, Port services, Technical testing and analysis services and Specialized cleaning services, we in this article are unveiling the problems existing in the Service tax refund mechanism under Insurance Services (Section 65[105][d]). This is the fifth article in the series wherein the complete scenario is being elaborated with the means of humorous poems and conversation between Johnny (an assessee) and his father but the main motive is 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 Insurance services are experiencing enormous complexities in getting their refund orders passed on vague and futile justifications that not only are annoying and irritating the assessees but also deprives away the faith of assessees on the refund mechanism designed by the Government. Such reasons on which the department is refusing the refund claims on the said services are being written out 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 Insurance service availed by me in relation to export of goods, but department said: -

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

The details of taxable value and service tax payable thereon are not mentioned. The documents issued by the insurer (including re-insurer) for payment of insurance premium does not specify the value of taxable service and the amount of service tax liability in the Insurance premium cover note. Further the refund claim was not accompanied along with the declaration document as regards the same. This is one of the pre conditions for availing the benefit of refund claim.

Johnny's View: 

The details as regards the documents evidencing value of taxable service and service tax thereon are simply a formal requirement. However, the declaration and proposal document as required by you contains the details of the taxable value and the service tax levied thereon which evidences the payment of service tax on insurance services, and the same is enclosed along with the refund claim. Further, as this service is related to the export of goods the refund should be granted.

Johnny says:  I went to the department next day again with the corrections and further supporting but department said: -

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

The Insurance policy cover note issued by the insurer (including re-insurer) for payment of insurance premium is not a valid document for refund claim and it does not specifically relates to export of goods. Even the documents are not in the name of exporter i.e. the assessee. Hence, this construe that the insurance services were not availed by the exporter in respect of goods exported and therefore the refund is rejected.

Johnny's View:

The insurance services availed from the insurer are specifically related to the goods which can be evidenced by the Marine declaration issued by the insurer. Although the insurance cover note doesn't specify the details of goods but the said declaration contains the details of vessel and the description of goods alongwith the amount insured. The same is enclosed along with the refund claim application. Hence the allegation that it doesn't relates to export of goods is futile.

The allegation on the remaining controversy as regards the name of exporter on the documents issued by the insurer is vague in its entirety. The cover note of the insurance premium policy specifically mentions the name of exporter. Thus, the complete scenario clearly picturizes that the service of insurance 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 payment details enclosed along with the refund claim supports this allegation further.

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 insurance policy taken by assessee is an open Marine Cargo Policy and it doesn't specifically relate to the goods exported. Further the amount of service tax charged in the invoice is related to the complete policy premium and it can't be linked to the export goods sent separately.

Further, the invoices issued by the Insurance agency do not fulfill all the requirements specified under Rule 4A like category of service, Description of service, valid Invoice Number, Service tax rate, Service tax registration number and other alike things. In continuation it is alleged that your argument that these are rectifiable defects and you have amended the same is not acceptable. As the document should be proper and valid document.

Johnny's view: -

The view taken by the department is incorrect. The insurance policy taken is an open Marine insurance policy wherein we deduct the value of the consignment sent on export from the balance amount of sum insured and the remaining balance is carried forward for rest of the consignments to be dispatched in future. Hence, we are claiming the proportionate amount of service tax refund calculated on the amount of value of consignment and total policy amount. Thus, there is no difficulty in deriving at the service tax amount and department should allow the refund claim on same.

At the last, the view taken by the Department is stringent in applying the legal language as provided under Rule 4A, whereas the department should adopt a liberal view in this regard, more to in the case of Rule 4A of Service tax rules requirements. Non compliance of the requirements specified under Rule 4A, does not lead to a severe impact and there should be a practice on the part of departmental authorities to avoid allegations if the Rule 4A is not complied in its entirety. 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 picturize the problems faced by assesses in getting the refund order as against the Insurance services. 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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