TIOL-DDT 2642
16 07 2015
Thursday

A netizen sent us this mail recently -

For IT sector assessees, whose major turnover is of export, refund of CENVAT Credit is a major point of dispute with the Department.

Rule 5 of the CENVAT Credit Rules, 2004 was substituted w.e.f. 1st April, 2012. Corresponding Notification was also changed - from 5/2006-CE(N.T.) dated 14.03.2006 to 27/2012-CE(N.T.) dated 18.06.2012.

A number of refund claims are being rejected in part or full on the basis of calculating the time barring period of one year under Section 11B of the Central Excise Act, 1944, based on the 'relevant date' as the date of receipt of export proceeds, as taken by the Department. As multiple export proceeds are usually received during almost all quarters, the first of such dates is taken by the Department and refund is rejected in part, or full accordingly.

Our firm is also a victim of such vagaries of interpretation.

As a large number of IT service providers are the IT development/support centers of many multinational companies, they mostly are billing only to their Parent/Group companies abroad and payments are also received from such Parent/Group Companies at regular intervals and amount received under one FIRC is at times adjusted against multiple invoices. Also, payment against one invoice is at times received under multiple FIRCs on various dates.

We were, therefore, pleased to read an article titled Filing of quarterly refund claims by exporters - Computation of limitation period on your portal recently and where the erudite author has succinctly highlighted the issue and requested the Board to come out with a clarification in the matter.

Incidentally, since DDT supposedly has a lot of inside information of the various Revenue formations, could you please inform us of any instance where any lower appellate authority has taken a pro-assessee stand on the issue?

Incidentally, DDT has learnt that the Commissioner of Service Tax (Appeals), Pune has passed an order on this issue and where it is concluded that - the last date of the quarter is the 'relevant date' for calculating the time limit of one year under Section 11B of the Central Excise Act, 1944.

The issue before him was -

• What was the relevant date for filing the refund claim for the period April to June 2012 under Rule 5 of CCR and accordingly whether the refund claim of Rs.10,48,656/- was correctly held as time barred and rejected?

The facts: In this case, the refund claim was filed on 28.06.2013 for the period from April, 2012 to June, 2012. Some Additional information was submitted by the Appellant on 13.06.2014 and 14.07.2014. The original authority held that the earliest date of realization of export proceeds during the period from April, 2012 to June, 2012 was 18.04.2012 vide FIRC dated 18.04.2012 against Invoice dated 05.03.2012 and, therefore the last date for filing refund claim was 17.04.2013 but since the same was filed on 28.06.2013, it was held that the same was filed beyond one year from the relevant date.

In an elaborate order laced with illustration the Commissioner (A) held -

++ I find that unless the entire quarter is completed, the exporter cannot file his refund claim, as the crucial documents like Bank Realization Certificates issued during the said quarter are required to be submitted together along with the refund claim. Also, the formula prescribed in the new Rule 5 of the CCR requires the use of ‘Net CENVAT Credit' which can be arrived at only at the end of the relevant quarter. Accordingly, I find that it is not legally correct to consider any date in between the quarter as the ‘relevant date'.

++ I am of the clear view that by no Rule or Notification, the period of one year provided under Section 11B of the CEA can be curtailed. Therefore, this interpretation adopted by the Ld. Respondent clearly violates the provisions of Section 11B of the CEA and has to be accordingly rejected. In other words, the one year period provided in Section 11B of the CEA cannot be curtailed by any interpretation of any Rule or Notification, as they are pieces of sub-ordinate legislation. Thus, I conclude that the ‘relevant date' for the purpose of new Rule 5 of the CCR is the last date of the relevant quarter and an exporter can file his refund claim within one year from the last date of the relevant quarter.

DDT adds - It is also pertinent to note that the logic of taking the last date of the quarter as the 'relevant date' was accepted in principle by the Central Govt. in Notification No. 12/2014-CE(N.T.) dated 3.3.2014 dealing with refund of CENVAT Credit under Rule 5B of the CENVAT Credit Rules, 2004, wherein relevant date has been taken as the date "the due date of filing of return for the half year" [Para 2(a) of the said Notification refers].

Hopefully, the CBEC should come out with a clarification and set the matter to rest.

See Order of Commissioner(Appeals), Pune

Tariff Values Decreased

THE Government has decreased the Tariff value of Gold from 382 USD to 376 USD per 10 grams and Silver from 516 USD to 498 USD per kilogram.

Tariff Values of all oils, Brass Scrap and Poppy seeds are also decreased.

However, Tariff value of Areca Nuts remains unchanged.

The Tariff values as on 30.06.2015 and with effect from 15.07.2015 are as under:

Notification No. 67/2015-Cus.(N.T.), Dated: July 15, 2015

Merchandise Exports from India Scheme (MEIS) - DGFT makes amendments

THE Director General of Foreign Trade, in exercise of powers conferred under paragraph 2.04 of the Foreign Trade Policy 2015-2020 has notified Additions/amendments in Table 1 (containing List of Country Groups) and Table 2 [containing ITC (HS) code wise list of products with reward rates] of Appendix 3B under the Merchandise Exports from India Scheme (MEIS).

This comes into immediate effect.

Public Notice No. 27/2015-2020, Dated: July 14, 2015

Progressive thinking - but not now!

ARTICLE 130 of the Constitution of India reads -

130. Seat of Supreme Court: The Supreme Court shall sit in Delhi or in such other place or places, as the Chief Justice of India may, with the approval of the President, from time to time, appoint.

Advocate A M Krishna had filed a petition seeking setting up of a separate bench of the Supreme Court of India in Chennai for easy accessibility of justice for citizens of southern states. The petition was sought to be justified on the ground that reports of the Law Commission of India and Parliamentary standing committees have favoured it.

In the alternative, it was submitted by the petitioner that even if a physical bench of the Supreme Court could not be set up in the Tamil Nadu capital, the use of new technology services and devices like iPads and tablets could be explored.

Dismissing the petition, the Chief Justice commented -

Yes we can do it, but not now. We appreciate your progressive thinking; but not now.

Service Tax - Don't tax overflight charges - IATA

INTERNATIONAL Air Transport Association (IATA) has called for the development of a comprehensive policy for aviation aligned with the Indian Government's stated intention to make it easier to do business in India. The objective is to allow India to derive maximum social and economic benefits as its aviation market grows to become the third largest in the world. That is expected to happen in 2029 when the number of travelers to, from and within India will near 280 million annually.

Already aviation and aviation-related tourism support 7 million Indian jobs and USD 23 billion of India's GDP. The healthy growth of the sector has the potential to expand these benefits tremendously. But there are immense challenges which must be overcome—as seen in the sector's financial performance.

Delivering a keynote address at the Aviation Day India, IATA Director General and CEO Tony Tyler highlighted three priority areas where work is needed to reduce costs in India:

Reducing the Tax Burden: The true value of aviation to the government's coffers is its ability to catalyze economic activity. Focusing on receipts through a layered web of taxes does a disservice to the country's economic potential. There has been a Tribunal decision on the application of Service Tax to the fees of Global Distribution Systems. It confirmed the principle that the tax should not apply to services rendered outside of India. So why aren't all payments for services that don't touch Indian soil - including overflight charges and extra baggage fees unequivocally exempted by the same principle? And, in line with international standards, international tickets should also be exempt from the Service Tax. And Service Tax should not be applied to taxes and charges collected—effectively being applied as a tax on a tax. Looking ahead, the incoming GST regime should also zero-rate international air transport services in line with OECD guidelines. And on top of this, it's time for India to implement standard double taxation provisions that would see profits from international services taxed only in the location where the airline has its head office. We are not trying to avoid taxes, but airlines should not have to pay twice!

Competitive Fuel Pricing: State taxes on jet fuel can be exorbitant - as high as 30%. Granting jet fuel "declared goods" status would be a good start to addressing this far too onerous burden. Simultaneously, it was a good decision to introduce competition in jet fuel supply at some key airports including Delhi, but what about opening access to the pipelines that get the fuel to the airport? The efficiencies of a liberalized market cannot be realized unless all fuel companies have access to key off-airport infrastructure that brings fuel onto the airport site.

Allowing AERA to do its work: Let the Airports Economic Regulatory Authority (AERA) to do its work independently.

The IATA Chief had a strong message for India: "I have been in aviation for nearly four decades. I am passionate about what aviation makes possible. I have seen it change lives for the better and improve prosperity in nations where the industry finds a supportive home."

He told the aviation Minister Ashok Gajapathi Raju, "All this gives me the confidence to say that you have the most exciting job in the Indian Cabinet today. The combination of your leadership, a determined government focus to make it easy to do business and the pent up demand for connectivity to this amazing sub-continent is an opportunity not to be missed."

Income Tax raids Dabba Traders

IT is heard that the Income Tax Department jointly with SEBI and NSE raided Dabba Traders in Mumbai and Pune and arrested a few traders.

"Dabba Trading" also known as "Bucketing" is trade by brokers where their client's trades are outside the Stock/Commodity exchange. In such a trading, the broker either does not execute any trade or matches and execute trades on its own terminal. Maybe a private stock exchange!

Until Tomorrow with more DDT

Have a nice day.

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