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Export of services

13 February 2016

Hello. My query is one of my client has been providing service of posting mails to foreign client which are booked in india .As no service tax is chageble on export of services, i want to to know how cenvat credit of service tax paid on input service will be availed & how refund of that can be obtained by Service tax department .This client is not registerd yet for service tax.?????????????

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6 Replies

CA Prakash N (Head - Indirect Tax (GST & FTP)) (373 Points)
Replied 13 February 2016

Question 1. Whether Cenvat Credit can be claimed?

As per Rule 2(e) of Cenvat Credit Rules, “exempted service”means a (1) taxable service which is exempt from the whole of the service tax leviable thereon; or (2) service, on which no service tax is leviable under section 66B of the Finance Act; or (3) taxable service whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken; but shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994.]

Therefore, if your activity is taxable under Service tax and it satisfies the condition prescribed under Rule 6A of service tax rules, you can avail credits pertaining to export of service.

Question 2: How to obtain refund of Cenvat Credit?

Please refer notification no 27/2012 CE (NT), which gives procedures and condition for claiming refund under Rule 5 of Cenvat Credit rules.

It also specifies Form A and Form A-1 i.e refund application and CA certificate formats.

(link https://www.cbec.gov.in/htdocs-cbec/excise/cx-act/notifications/notfns-2012/cx-nt2012/cent27-2012 )

Question 3: Whether ST registration shall be taken?

Yes. Company is required to take ST registration for claiming refund, it has to show Cenvat Credit claimed in ST-3 returns.

Question 4: Pre-registration credit can be taken?

As there is no specific restriction in Cenvat Credit rules, company can take pre-registration period credit. However, credit can be taken for last 1 year. This 1 year limitation is not applicable to Capital goods.

Note: You can not go for refund of credit on capital goods.

Please revert for any clarifications.

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Bhavesh Khanvilkar (other) (676 Points)
Replied 13 February 2016

Where any taxable service is exported, Rebate can be claimed as per Notification no 39/2012 of service tax or
duty paid on input services or inputs.

I am confused between your view and above way

CA RAJESH BALSARA (Proprietor) (262 Points)
Replied 13 February 2016

Your client will be eligible for cenvat credit against input services for services used in such export of services..Definately registration under service tax is compulsory..And you need to file service tax return periodically. Service tax refund application filed quarterly. Such refund application should be filed within 12 month from the first month of the quarter for which application is filed..for example...if you are claiming refund applicatio for period April 2015 to June 2015 then you should filed refund claim before 31st March 2016..Now issue regarding which input services can be claimed. An invoice can be included in cenvat registration within one year from date of invoice..So even now you can include it..It could be debatable at refund assessment stage..But you have proper base..

Miten Bhanushali (Student) (37 Points)
Replied 15 February 2016

As per Rule 6A consideration should be received in foreign currency application for refund shall be filed before such export of service

VISHAL GARG (Learning from life) (106 Points)
Replied 15 February 2016

Bhavesh ji my client is registerd and giving similar services in india also.Is it mandatory to claim refund only? They cant utilise this credit aginst services provided in india? Because in practical taking refund is quite difficult and complex so there is unnecessary bloackage of funds.