Johnny and Service Tax Refund [Series- II] Part 1: `INVOICE'

Johnny and Service Tax Refund [Series- II]

Part 1: `INVOICE'

 

                                                                        Prepared By: -                       

CA. Pradeep Jain

Mayank Palgauta

 

We have already written one complete series of articles for the refund of service tax to exporters under notification no. 41/2007-ST. The litigation on the same is still going on. The Government has come up with the new notification no. 17/2009-ST dated 7th July, 2009 to make the scheme simple so that the refund is available to the exporters conveniently. But there is no sign of relief for the exporters. They are still struggling to get the refund from the department. With this second series of the articles, an effort has been made to bring out the misery of exporters. This also brings out the present situation existing in the refund structure mechanism under Service tax. This state of affair also is elaborated with the means of poems and conversation between Johnny (an assessee) and his father.

 

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

 

Today, in the present scenario also, the poor exporter is still facing enormous difficulty in getting refund orders as stated in the lines above. There is no radical change has taken place even after the change of total scheme by the Government. The refund claims are the Right of the exporters but the department is rejecting these claims on various grounds which are of trivial importance. This resulted in frustration and skepticism among exporters as regards the Refund mechanism. The one of the conditions relating to INVOICE on which the department is rejecting the refund claim on various services mentioned in the Notification No. 17/2009-ST dated 7th July, 2009 (herein after referred to as said notification) are highlighted here by means of poetic conversation: -

 

Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

 No Papa,

What's the reason?

This papa: -

 

Johnny says:  I went to department to get the refund on various invoices issued by service providers under said notification but department said: -

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

 

In relation to refund claim filed by the exporters, they require the original invoices. It is told to them that the original invoices are required by various departments. Hence the same cannot be given to you. But the department is saying that it is condition of the notification and it cannot be relaxed. We said that we can show the same to you and you compare the same with Xerox copies given by us to you along with refund claim. Then give the same back to us per bearer. But they did not agree. They say that the condition has been imposed so that the double refund claim is not taken by you on the same invoice. We have told that you can put a seal on these original invoices saying that the refund is claimed, not to be used again. But they did not agree and told that it is condition precedent for claiming the refund that the original invoices should be submitted with us. We were helpless and submitted the original invoices. We were hopeful of getting the refund thereafter. But we were not aware of the fact that we are dealing with revenue department who can collect the crores of rupees but cannot give small refund claim. The second objection was raised by them

Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

 No Papa,

What's the reason?

This papa: -

 

Johnny says:  I went to department to get the refund on various invoices issued by service providers under said notification but department said: -

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

 

All the original Invoices issued by a service providers like Custom House Agent for CHA services or by a Cleaning and Forwarding Agent for cleaning and forwarding services should have certificate as mentioned the notification 17/2009. In this endorsement the assessee has to certify that the services mentioned in the invoices have issued to the assessee; the service tax has been paid thereon by the assessee and said services have been utilized in export of goods under the particular shipping bill no. and its date. We have told them that we have made a rubber stamp of this certificate and put it on Xerox copy of the invoice. But they said that the same should be put on the original invoice. We have told that the original invoice is required by many department and auditors. Hence, we will use them for various purposes after the same is returned to us. But they did not agree and told that the same should be put on the original invoice. We have no option but to agree their demand. After the seal was put on original invoice, we asked for the refund. But the department came with the next arrow. He has told that you have written in rubber stamp the category of service, shipping bill number and date is as per table annexed to refund claim. But the shipping bill number, category of service should be mentioned on the invoice only. We have learnt from past experience that we have no option before the department but to abide by the things as told to us. Hence, we followed their instructions and corrected all the invoices in the hope of service tax refund claim. The assessee submits that the reference of all the Shipping Bills and its date has already given in tabular form with refund claim application. Thus the demand of mentioning the reference of the same in each and every invoice of the service providers has ridiculous point.

  

Johnny says:  I went to the department next day again with the corrections but department rejected saying: -

Johnny-Johnny go away,

You won't get refund anyway.
It has following more flay: -

The invoices of various service providers have not prepared under Rule 4A of Service Tax Rules, 1994 as many of invoices are not serially numbered; some invoices do not have the Service tax Registration no. of service providers and some of them are not having the description of service provided during the course of Export of goods. Even the same is not mentioned in the table annexed to the refund claim. Furthermore, the same is not mentioned in certificate endorsed on the face of invoice. We pleaded that when the service provider has not mentioned the above details in his invoices then how we can know the above information like under which category the service provider is providing the services. Further, we argued that since these mistakes have not done on our part, the refund should not be denied on these ridiculous grounds which are beyond the control of the assessee.

 

Unrewarding again & again;

Johnny now in grief and pain!

`Refund Order' now a dream;

His efforts have downstream!

 

Johnny's contention:-

To fulfillment of the condition of submitting ORIGINAL INVOICES to the department, we have produced all the ORIGINAL invoices of all the service providers at the time of refund but these have not come back to the our custody as the department contending that they will keep them for the purpose of refund claim. They contend that even after the refund is sanctioned or rejected then the file will go for audit and the department has to send the original invoices to audit wing or review wing. Thereafter, if the appeal is filed then they will keep the invoices with them. 

 

Seeing these erroneous interruptions, obstacles and arguments taken by the department, the exporter-assessee wants to say one sentence to the Government that "HATHI KE DANTH KHAANE KE AUR, DIKHAANE KE AUR" because on one point the Board is issuing the exemption notifications for promoting the Export of goods outside India and on the other side Revenue department is not happy to sanction the refund claim.

 

At the end all the exporters, whose refund claim is under evolution from extensive time period, raise one question that why the Finance Minister is not exempting the exporters from payment of service tax itself in order to remove these types of silly troubles which became a big barrier thereafter. They require straight forward exemption rather than exemption by way of refund.

 

By this humorous and poetic article above we conclude that the physical condition and mental state of assesses claiming refunds against export of goods is similar to that of Johnny in the poem. Every time the assessee is approaching the department his refund claims are being rejected on some or the other flaws. He has to return fruitless, hopeless with his futile efforts thinking whether he will be getting the refund or not. 

 

There are a number of services on which the refund is allowed. The assessee is facing difficulty in almost all of those services due to attached conditions with each service. Due to the large number of conditions we were not able to cover all the conditions in this article and hence we will be bringing further articles on the different conditions covered therein.

 

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