Johnny and Service Tax Refund [Series- II]
Part 2: CONDITIONS RELATING TO CHA SERVICE
By: -
CA. Pradeep Jain
Mayank Palgauta
In continuation of previous article, elaborating the difficulties in getting the refund claim under various services on the ground of Invoices [Click here to read the previous article] , we in this article are unveiling the problems existing in the Service tax refund mechanism relating to Custom House Agent (CHA) service. This complete scenario is being elaborated with the means of humorous poems and conversation between Johnny (an Exporter-Assessee) and his father but the main object 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.
Presently, assesses are claiming refund orders on the services provided by CHA which are gigantic problematic services in getting refund. The refunds claimed by the assessees as against their exports are their civil rights but are being declined by the departmental authorities on various arguments which are of no significance and value less. The various reasons on which the department is refusing these refund claims on the said service are highlighted as under: -
Johnny-Johnny! Yes papa!
Got the refund?
No Papa,
Telling lies?
No Papa,
Whats the reason?
This papa: -
Johnny says: I went to the department to get the refund for CHA service but department said: -
Johnny-Johnny go away,
Come again another day.
Your refund order has following Flay: -
The claim of refund made in respect of CHA services are not admissible to us as we (assessees) have submitted the invoices issued by the CHA in relation to export goods do not contain many details. They do not have shipping bill number and date, invoice number and date and details of export goods.
Johnnys Submission: -
We submitted that these details are required to correlate the bill with the export goods. The same can be correlated with the help of other evidences. But the department said that these are mandatory requirement in the notification and hence the same cannot be dispensed with. We were helpless. We went to CHA and took a certificate from him which gave the complete details in respect of each shipping bill. We produced the same before the learned authority. But the department officer did not adhere to the same. He said that the same should be available on the face of invoice and certificate will not serve the purpose. We tried to convince him but of no use. He was bent upon his contention. He said that it is mandatory requirement that should be mentioned on the face of invoice. We asked the original invoices and went to CHA and get it incorporated in his invoice under his seal and signature. The same was again submitted to the department.
Johnny says: I went to the department next day again with the certification but department said: -
Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: -
The next objection from the department was that the notification asks that the exporter should declare all the other expenses incurred by the department relating to export or not. Since he has charged only the agency charges and hence the same cannot be verified.
Johnnys Submission: -
Against this argument, we submitted that no other charges have been collected by the CHA other than those mentioned in the invoices. The CHA has charged only the amount that has been collected; no other amount has to be reimbursed by us. The Notification no. 17/2009 by serial no. 11 and in column no. 4 prescribes the following conditions for granting of refund for CHA services:-
(ii) details of other taxable services provided by the said custom house agent and received by the exporter, whether or not relatable to export goods.
In the last condition, it is written that we (Exporter) should declare all the other charges paid to CHA whether or not relating to export goods and whether or not reimbursed. But the department did not agree. Then we said that since we have to declare the expenses. Hence, we are enclosing the certificate duly signed declaring no other charges, whether reimbursable or not, collected by CHA from us relating to export goods.
Johnny says: I went to the department next day again with the certification but department said: -
Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: -
No proof has been submitted by assessee regarding the fact that the services have been provided by the service provider who is CHA in accordance with the provisions of Finance Act, 1994. The Licence certificate of custom house agent should be provided in this regard.
Johnnys Submission: -
We submit that these service providers provide the services like Agency charges. Further, invoices of the service providers were submitted alongwith the refund claim which shows the Service tax registration number. The service tax registration number was allotted by your good office as per old provisions (in some case) as well as per new provisions in which registration is based on PAN number of the assessee (in rest cases). The category of service mentioned on the invoice is also Custom House Services. All these are clear evidences of the fact that these service providers are the CHAs was on the face of the invoices submitted with the refund claim. But raising an allegation to submit certificate of CHA, is not justified at all. As such, the prime conditions are satisfied and so refund should also be allowed to us. But the Department is containing that since in the said Notification prescribed the condition of fact of CHA service, demanding the Licence certificate of CHA only as to confirmation the fact that the service is actually provided by a CHA only in accordance with the provisions of Finance Act, 1994. We are vulnerable before the Department and go to the CHA again for bring the copy of his Licence Certificate. The certificate duly authorized is then also presented to the Department.
Johnny says: I went to the department next day again with the further corrections but department rejected saying: -
Johnny-Johnny go away,
You wont get refund anyway.
It has following more flay: -
The all taxable services other than for the exported goods provided by the CHA and received by us are not mentioned separately in the invoice issued by the CHA.
Johnnys Submission: -
In this regard, Jonny (Exporter) submits that since we are only claiming refund for service tax charged on services availed during the course of export of goods then what is the significance of demanding the details of all other services provided by such service provider. The Department in this regard argues on the same ground that since the Notification itself mentioned the condition of providing details all the other services provided by such provider then only refund will be allowed to the claimant. Thereafter we say that in what manner this condition should be satisfied on our part. Either we provide all the invoices of service provider (which seems to unpractical as well as undue hardship for any claimant) or we provide the ledger account of the service provider. Then the department demands a declaration for the same condition. In order to get the refund we again do exactly the same which is told to us to do by the Department.
Then we declare in form of a Declaration Letter that the no other taxable services have been received by us from CHA other than those have been mentioned in the invoices issued to us by CHA.
Further we submit that the refund should not be rejected on the basis of technical discrepancies as in the case of BAJAJ TEMPO LTD. VERSUS COMMISSIONER OF C. EX., AND CUSTOMS, PUNE [1999 (106) ELT 145 (TRIBUNAL)], the honble Tribunal has allowed credit in case where there were certain technical discrepancies/insufficient information in the invoice. Since the prime conditions the export of the goods, availment of specified service in course of export and payment of service tax invoice are not in dispute; therefore, relying the ratio of above cited decision, the refund of service tax should be allowed to us. It was further held in the case of COMMISSIONER OF C. EX., MUMBAI Versus MANISH ENGINEERING CORPORATION [2003 (162) E.L.T. 670 (Tri. - Mumbai)].
But at the end the outcome was the same as always comes out which can be shown by the following lines: -
Fruitless again & again;
Johnny now in grief and pain!
Refund order now a dream;
His efforts have downstream!
Although the article is ornamented with humorous poems but the key motive is to bring into light the intricacies involved in the refund orders. 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 conditions subject to which the refund is allowed. The assessee is facing difficulty in almost all of those conditions. Due to the large number of conditions we were not able to cover all the conditions in this article and hence we will be bringing further articles on the different conditions covered therein.
Keep visiting for the next article..
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