Johnny and Service Tax Refund (Series-II) Part VI: – “Self Certification – An Inflexible Condition” | My Refund

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My Refund

Johnny and Service Tax Refund (Series-II) Part VI: –

“Self Certification – An Inflexible Condition”

By: -                           CA. Pradeep Jain

Mayank Palgauta

Visit us at: www.capradeepjain.com

In continuation of previous articles, elaborating the difficulties in getting the refund claim under different conditions, we in this article are unveiling the problems existing in the Service tax refund mechanism under condition of Certification of Self Certification. This complete scenario is being elaborated with the means of humorous poems and conversation between Johnny (an assessee) and his father but the main motive is to bring out the problems faced by exporters.

Johnny and Jill went up the hill, to get the refund order
Johnny came back with a lack
And Jill came hopeless after.

Presently, assesses are claiming refund orders under various services as specified under Notification No. 17/2009-ST and are experiencing vast intricacies in getting such refund orders. The refunds claimed by the assessees as against their exports are their Rights but are being refused by the departmental authorities on various arguments which are of no significance and worth less. Such reasons on which the department is refusing the refund claims on the said services are being written out hereunder as follows: -

Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

No Papa,

What’s the reason?

This papa: -

Johnny says:  I went to the department to get the refund for the various services availed by me in relation to export of goods, but department said: -

Johnny-Johnny go away,
Come again another day.
Your refund order has following Flay: -

The documents/ invoices issued by the service provider are not duly certified in terms of Paragraph 2 (i) & (j) of the Notification No. 17/2009- ST and thus the refund is not sustainable.

Johnny’s View:

In this respect it is submitted by us that the Paragraph (i) of the said notification is reproduced below-

(i) where -

(A) the total amount of refund sought under a claim is upto 0.25% of the total declared free on board value of export;

(B) the exporter is registered with Export Promotion Council sponsored by the Ministry of Commerce or the Ministry of Textiles;

(C) subject to the provisions of (A) and (B) above, each document specified in clause (b) and in column (4) of the said Table shall be enclosed with the claim;

(D) invoice, bill or challan, or any other document issued in the name of the exporter, showing payment for such service availed and the service tax payable shall be submitted in original after being certified in the manner specified in sub-clauses (E) and (F);

(E) the exporter is a proprietorship concern or partnership firm, the documents enclosed with the claim shall be certified by the exporter himself and where the exporter is a limited company, the documents enclosed with the claim shall be certified by the person authorized by the Board of Directors;

(F) the documents enclosed with the claim shall contain a certificate from the exporter or the authorized person to the effect that specified service, to which the document pertains, has been received, the service tax payable thereon has been paid and the specified service has been used for export of goods under the shipping bill number;

If the sub clauses of the clause (i) are taken one by one, our refund claim is less than 0.25% of the FOB value. The (C) point says that subject to point (A) and (B) all the conditions in clause (b) and in column (4) of the said Table shall be enclosed with the claim should be satisfying. According to the table we have submitted all the documents and fulfilled all the conditions specified. It is further submitted that in the columns of the table given in Form-A1 the assessee has to give detail of each and every invoice issued by service provider with corresponding shipping bill no. and date, Bill of lading no. with date, description of goods exported, quantity of goods exported, FOB value etc. In our case we have given full description as required in the table. This shows that the particular service is relating to a particular shipping bill/Bill of lading. Therefore the fact is clear that all the specified services are used in the export. Further in the column no. 17 of the same table requires the detail of “Total amount of Service Tax Paid” in which we have mentioned the amount of service tax paid by us and same is claimed as refund. So the word PAID written in the column no. 17 also clears the fact that whatever written in that column is already PAID. Further the substantial conditions viz. export of goods, use of services in export of goods, payment of service tax etc. have been fulfilled by us for the purpose of refund claim of service tax. But due to unintentional error the certification was missed in the invoices. This is rectifiable error and we are ready to rectify the same. But as the original invoices is already submitted to your good office (i.e. the department) so they enclosed the certification letter in which it is certified by the authorized signatory that,

“We certify that all the services that were mentioned in the invoices submitted with the refund claim has been received by us, that we have paid the value of the services and the service tax thereon and the said taxable services have been fully utilized in export of goods covered under the shipping bill as filed in the refund claim”

Thus, it is clear from this certification that we were certifying the services which were relating to the export goods. Further the certification letter also contained that the amount on the corresponding invoices had been paid. There was no such intention to make this type of error as there is no any benefit to us on non giving the certification. Further this is a procedural mistake which should be condoned as the substantial conditions i.e. export of goods, use of service in export, payment of service tax etc. were already fulfilled by us.

Johnny says:  I went to the department next day again with the corrections and further supporting but department said: -

Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: -

Further the order of Adjudicating Authority has been passed saying that “certification is an important aspect of the scheme of Notification No. 17/2009-ST as it does away with submitting proof of payment.”

Johnny’s View:

In this regard we submit that the point A of the clause (i) of the paragraph 2 of the Notification says that-

the total amount of refund sought under a claim is upto 0.25% of the total declared free on board value of export;

The above point specifically say that the refund sought under a claim is upto 0.25 % of the total declared FOB value on export. So the above has made the point clear that 0.25 % has to be calculated considering the total amount sought in a refund claim. Therefore we have rightly calculated 0.25% on the total amount they

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