Exemption to certain taxable services specified in the Schedule received by an exporter and used for export of goods - Certain critical issues

[C.A. Surender Gupta]

Notification No. 41/2007 ST dated 6-10-2007 prescribes exemption, conditions and manner in which exemption to certain services used for export of goods is to be claimed. Some of the critical issues are being discussed here:

1. Applicability of Duty Drawback simultaneously with claim of refund of service tax paid on certain services

Notification 41/2007 has been amended vide notification no. 33/2008 to enable the exporter to claim duty drawback simultaneously with the claim of refund of service tax used in export of goods. Since the notification was issued as on 7-12-2008, the board must issue a clarification that the relaxation from condition of non claim of duty drawback is applicable from 6-10-2007 or for the entire period of claim of the quarter October 2008 to December 2008 or for the entire financial year.

This issue gets strength from the amendment in form for claiming refund. In the form in serial No.10, item (iii) has been omitted. Therefore, for filing refund for the quarter ending December 2008 there is no need to make any declaration in respect to duty drawback.

2. Period of limitation under section 11B of Central Excise Act, 1944 as applicable to provisions of Service Tax

Application for refund of service tax was required to be filed within 60 days from the end of relevant quarter. This condition has been relaxed by amendment notification no. 32/2008 to extend the time limit from 60 days to 6 months from the end of the relevant quarter.

Accordingly a question arouse that this amendment is retrospective in nature of prospective in nature. This issue has been clarified by the board in its circular 112/06/2009-ST dated 12-3-2009 by stating that refund for the quarter ending June 2008 should be accepted if filed on or before 31-12-2008

But, the issue is whether board can relax the condition of a notification.

One view is that the conditions relating to time limit for filing of a refund claim is procedural in nature. And a procedural condition can not override the statutory provisions of law. Section 11B the central excise act, prescribe the maximum time limit of one year from relevant date. Accordingly, the relevant date in case of export is counted from the date of export.

Accordingly, one can argue that even if an exporter fails to meet the deadline of six months or sixty days from the end of relevant quarter, he can file the refund claim within one year from date of export.