FEBRUARY 22, 2016

By Ashish Bajaj, CA

NOTIFICATION no. 41/2012-ST dated 29th June 2012 provides rebate of service tax paid and can be claimed in any of the following manner -

 i. Actual Service Tax paid on the basis of duly certified documents

 ii. Rebate calculated on the basis of rates mentioned in schedule of notification.

However if the difference between rebate amount calculated on the basis of (i) and (ii) above is less than the 20% of rebate claim amount available under method (ii) then rebate will be granted on the basis of method (ii) only.

The Central Government has issued amending notification no. 01/2016-Service Tax dated 3 rd February, 2016 which, as per the subject matter indicated on the cbec website, causes the following effect: -

 i. In case excisable goods are exported then rebate is admissible on all taxable services used for export which are incurred beyond place of production;

 ii. Schedule rates mentioned in the notification for calculating rebate has been increased commensurate to the increased service tax rate [which may perhaps reflect the increase from 12.36% to 14%].

Unlike Notification No. 39/2012-ST, dated the 20th June, 2012 which has been amended by notification 3/2016-ST dated 03.02.2016 so as to provide for rebate of Swachh Bharat Cess (SBC) paid on all services used in providing services which are exported in terms of rule 6A of the Service Tax Rules & notification no. 12/2013-ST dated 1st July 2013 which is amended by notfn. 2/2016-ST dated 03.02.2016 so as to allow refund of Swachh Bharat Cess paid on specified services used in an SEZ, notification 41/2012-ST does not see such an explicit mention.

And in this view of the matter, it is desirable that the Government, either issues a clarification to indicate that the increased service tax rate incorporates the SBC component in the schedule rates and at the same time insert an explanation akin to that prevalent in notification 39/2012-ST defining the expanse of the term "service tax" or a specific mention as in 12/2013-ST that rebate of SBC is available.

Level playing field is what everyone wishes to have and it obviously cannot be intention of the Government to discriminate between different sets of manufacturers.

Hopefully, needful would be done in the ensuing Budget if not before.