WE are getting a large number of mails from worried exporters and more worried consultants on the subject.

Notification 41/2007 ST dated 6.10.2007 allowed refund of service tax paid on certain services used by the exporters of goods. As per the procedure given in the Notification, the refund claims are to be filed on quarterly basis within six months from the date of export.

The time limit for claiming the refund has been clarified by the Board vide Circular No 112/2009 as under:

It is clarified that consequent upon revision of limitation period, any refund claim that is filed within such revised limitation period would be admissible if it is otherwise in order. Therefore, refund claims of service tax on specified taxable services used for exports of goods made in the quarter Mar-Jun 08 could be filed till 31 st Dec 08.

However, the clarification given in the same table at Sl No IV reads:

It is clearly prescribed in the notification that limitation period of six month is to be computed from the date of exports.

So, some officers are interpreting that the refund claims filed beyond six months of the date of export are barred by limitation. Thus the claim for the goods exported in March 2008, if filed in the month of October 2008 would be time barred. However, this view is contrary to the clarification given at Sl No I which clearly stated that the claim could be filed till 31 st Dec 2008.

Apparently, the clarification at Sl No IV of the table that the limitation period of six months to be computed from the date of export is only meant to clarify that the date of receipt of remittances is not relevant for computing the limitation, as can be seen from the column “issue raised”.

In any case, it would be appropriate for the Board to resolve the confusion in the minds of the concerned officers.

Fortunately, the refund is now governed by Notification No. 17/2009 ST (after rescinding of Notification 41/2007 ST) which clearly stipulated the time limit as one year from the date of export.

Requirement of lease agreement when Developer/Co-Developer and unit are same – DOC Clarifies

Department of Commerce has clarified that in cases where Developer or Co-Developer setup a unit, there is no need for a separate lease agreement between the developer/Co- Developer and unit. An allotment letter from the Developer or Co-Developer to the unit would be sufficient.

DOC INSTRUCTION NO 31: Dated August 17, 2009

Clearance of used capital goods into Domestic Tariff Area - DOC Clarifies

Department of Commerce has clarified that he capital goods which have been procured by the developer or co-developer for undertaking authorise operations in SEZ can be cleared back into DTA following the procedure as per the provisions of rule 49(3).

Rule 49(3) reads as

Goods on which any export entitlements were availed at the time of procurement of goods may be supplied back to the Domestic Tariff Area on payment of duty equivalent to the export entitlements availed subject to the condition that the identity of goods being supplied back to the Domestic Tariff Area is established to the satisfaction of the Specified Officer

DOC INSTRUCTION NO 32: Dated August 17, 2009

CESTAT needs Technical Members

Government has called for applications from candidates for appointment of Technical Members in CESTAT in the pay scale of Rs 75500-80,000/- as there are some anticipated and unanticipated vacancies. Now what are unanticipated vacancies? Are they planning to remove some Members or are some Members planning to quit?

The Qualification: a member of the Indian Customs & Central Excise Service Group ‘A' and has held the post of Commissioner of Customs and/or Central Excise or any equivalent or higher post for at least three years, and has attained the age of 45 years. Applicants who have already appeared twice for interview for the post of Member (Technical) in CESTAT need not apply again as they will not be called for interview.

Department of Revenue F.No.A.12026 /2/2009- Ad1C : Dated August 17, 2009

Jurisprudentiol – Thursday's cases

Central Excise

CENVAT Credit – Inputs used for generation of electricity cleared outside the factory – not entitled for credit – Supreme Court

The definition of "input" brings within its fold, inputs used for generation of electricity or steam, provided such electricity or steam is used within the factory of production for manufacture of final products or for any other purpose. The important point to be noted is that, in the present case, excess electricity has been cleared by the assessee at the agreed rate from time to time in favour of its joint ventures, vendors etc. for a price and has also cleared such electricity in favour of the grid for distribution. To that extent, assessee was not entitled to CENVAT credit. In short, assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption). They are not entitled to CENVAT credit to the extent of the excess electricity cleared at the contractual rates in favour of joint ventures, vendors etc., which is sold at a price.

Income Tax

TDS on payments to non-resident - if payee has paid tax then AO is not justified to raise demand for short deduction; Assessee's default comes to end when payee pays tax for payments received from deductor - It is not expected from deductor to decide tax status of payee: ITAT

The issue as to under which head the income is to be taxed is between the payee and the Assessing Officer having jurisdiction over the payee. Tax is to be paid by the payee and the deductor is only facilitating in the collection of such tax. The deductor can raise a ground in respect of his bona fide belief for short deduction of tax at source but he cannot step into the shoes of the Assessing Officer having jurisdiction over the payee to decide the head under which such income is to be taxed.

Service Tax

Security Services provided to Director at his residential bungalow, Repair & maintenance of guest house and garden – Prima facie there is nothing to show that there was any connection, directly or indirectly in or in relation to manufacture or clearance of finished products – Pre – Deposit ordered - CESTAT

The lower authorities denied CENVAT Credit amounting to Rs.3,61,193 /- in respect of the following three Services –

+ Repair and Maintenance of guest house and garden;

+ Security service provided to a Director of the company at his residential bungalow;

+ Outdoor Catering Service, and also imposed equal amount of penalty on the party under section 11AC of the Act.

See our columns Tomorrow for the judgements

Until Tomorrow with more DDT

Have a nice day.

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