1 year time limit to claim refund under Rule 5 of CCR reckoned from the date of receipt of export proceeds and not from date of export of services


Court :
CESTAT of Bangalore

Brief :
The Hon’ble CESTAT, Bangalore held that although there is no specific 'relevant date' under Section 11B of the Excise Act to claimrefund of unutilized credit, but, that would not rule out applicability of Section 11B. Relevant date should be the date of export. Since, as per Rule 3(2) of erstwhile Export of Services Rules, 2005, export of service is complete when consideration for same is received from foreign buyers, hence, relevant date would be 'date on which consideration for exported service is received'. Thus, matter was remanded back for allowing refund falling within 1 year from date of receipt of consideration.

Citation :
Infosys Technologies Ltd. Vs. Commissioner of Service Tax, Bangalore [2016 (67) taxmann.com 313 - CESTAT BANGALORE]

We are sharing with you an important judgement of the Hon’ble CESTAT of Bangalore in the case of Infosys Technologies Ltd. Vs. Commissioner of Service Tax, Bangalore [2016 (67) taxmann.com 313 - CESTAT BANGALORE] on the following issue:

Issue:

Whether 1 year time limit to claim the refund of Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 (“the Credit Rules”) should be counted from the date of export of services or from the date of receipt of export consideration?  

Facts & Background:

Infosys Technologies Ltd. (“the Appellant”) was engaged in export of services and was also availing the benefit of Cenvat credit of Service tax paid on various input services. After utilising the Cenvat credit for payment of tax on certain taxable services, the Appellant was left with unutilised accumulated Cenvat credit. Accordingly, the Appellant filed refund claim on June 6, 2008 for the period April 2007 to March 2008 in terms of Rule 5 of Credit Rules.

Revenue’s contention: The Revenue rejected part of refund claim as time-barred on ground that refund claim must be filed within 1 year from date of export of services.

Appellant’s contention: There is no time limit for refund claim of the unutilised Cenvat credit in terms of Rule 5 of the Credit Rules. Notification No. 5/2006-CE (NT) dated March 14, 2006 (“Notification No.5”) issued under Rule 5 of the Credit Rules refers to Section 11B of the Central Excise Act, 1944 (“the Excise Act”), but there is no ‘relevant date’ defined or prescribed for refund claim of the unutilized credit. In the absence of any relevant date defined, it should be left to the assessee to decide as to from which point of time, they were not in a position to utilize the Cenvat credit and claim refund thereafter.

Held:

The Hon’ble CESTAT, Bangalore held that although there is no specific 'relevant date' under Section 11B of the Excise Act to claimrefund of unutilized credit, but, that would not rule out applicability of Section 11B. Relevant date should be the date of export. Since, as per Rule 3(2) of erstwhile Export of Services Rules, 2005, export of service is complete when consideration for same is received from foreign buyers, hence, relevant date would be 'date on which consideration for exported service is received'. Thus, matter was remanded back for allowing refund falling within 1 year from date of receipt of consideration.

Our Comments:

It would not be out of place here to mention that Notification No. 5 prescribing safeguards,conditions and limitations for the purpose of Rule 5 of Credit Rules was superseded vide Notification No. 27/2012 – CE (NT) dated June 18, 2012 (“Notification No. 27”).

Further, effective from March 1, 2016, Notification No. 27 is amended vide Notification No. 14/2016 - CE (NT) dated March 1, 2016 so as to provide the time limit for filling application for refund of Cenvat credit under Rule 5 of the Credit Rules, in case of export as under:

  • in case of manufacturer, before the expiry of the period specified in Section 11B of the Excise Act,
  • in case of service provider, before the expiry of one year from the date of:

1. receipt of payment in convertible foreign exchange, where provision of service had been completed prior to receipt of such payment; or

2. Issue of invoice, where payment for the service had been received in advance prior to the date of issue of the invoice

This is indeed a pleasant amendment which would help to resolve all the disputes, which had originated in course of interpretation of Section 11B of the Excise Act in the case of time limit for filing refund claim on export of services.

Videos on Union Budget, 2016:

Important changes in the arena of Indirect Tax - Service Tax & Excise
Reactions on Union Budget 2016 by Bimal Jain

Important Union Budget, 2016 changes in Indirect Taxes effective from April 1, 2016:

Service Tax & Cenvat Credit Rules, 2004

Central Excise & Customs

Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards,
Bimal Jain
FCA, FCS, LLB, B.Com (Hons) 

Email: bimaljain@hotmail.com

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon. 

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

 

bimal jain
on 04 May 2016
Published in Others
Views : 2954


 Recent Comments

Total: 2







×

  LAWyersclubindia Menu

web analytics