Refund of Service Tax – Issues & Challenges

Service Tax, because the identify suggests is a tax leviable on all duties. It’s a tax levied on the transactions of the power specified by the Central Authorities beneath the finance Act, 1994. It’s an oblique tax (akin to Excise responsibility or Gross sales tax), which implies the service supplier pays the tax and recovers the quantity from the recipient of the taxable work.

Service Tax is mostly recovered by Assessee in two methods:

• By using the identical as within the type of Cenvat Credit score, or

• By Claiming the Refund.

Any Assessee can make the most of the quantity of responsibility paid by him in extra by adjusting the identical with the responsibility quantity paid in subsequent interval. Refund of tax will be claimed by Assessee the place self- adjustment of Service Tax shouldn’t be possible.

Refund of Service Tax usually occurs in case of export oriented corporations (STPI, SEZ, EOU models) which export their closing product/responsibility, as no tax is levied by Authorities to advertise the export. Such corporations disburse excise on the enter/output help procured by them however usually are not capable of make the most of the Cenvat Credit score as a result of no due is obtained by them on export of their providers. Because of this, such corporations need to decide the process of claiming refund for unutilized cenvat (tax) credit score.

The Export Oriented Models, particularly the STPI models have been dealing with many hurdles and difficulties whereas claiming the service tax refunds. There had been inordinate delays in the direction of the scrutiny of refund functions coupled with rejections of the claimed quantities as a consequence of varied causes by the designated authorities, main causes being:

• Time Limitation for the refund declare of duties.

• Related date for the calculation of limitation interval in respect of submitting the refund declare.

• Implication of the Precept of Doctrine of Unjust Enrichment.

• Submission of separate Overseas Trade Remittance Certificates (FIRC) in case of segregated export of products & utilities.

• Submission of Authentic paperwork similar to Bill, BL, SB, BRC and many others.

The Central Board of Excise & Customs is seized of this matter and has been repeatedly clarifying on this challenge by means of varied clarifications/Notifications overlaying many procedural points with respect to refund of service tax paid. It has settled many points just like the time inside which the refund declare shall be filed, acceptance of licensed photocopies as a legitimate doc, submission of self-certified assertion together with FIRCs and many others.

Regardless of varied initiatives taken by the division, there was an enormous pendency of tax refunds primarily due to the unfinished documentation by the claimants, tedious strategy of bodily verification of paperwork submitted to the division and the distinction of notion between the claimant and the division relating to the admissibility of enter providers eligible for refund.

There are numerous specialised Service Tax Advisor in Delhi, NCR that helps corporations in checking out the issues they face associated to tax. However it’s all the time advisable to do some severe analysis earlier than contacting a STPI Advisor in Delhi.