EXEMPTION FROM SERVICE TAX

EXEMPTION FROM SERVICE TAX

1. In what circumstances would refund of service tax be demanded back by service tax authorities?

Where any refund of service tax is paid to an exporter but the sale proceeds in respect of the said goods have not been realised by or on behalf of the exporter in India within the period allowed under the Foreign Exchange Management Act, 1999, such service tax refunded shall be recoverable under the provisions of the said Act and the rules made there under, as if it is a recovery of service tax erroneously refunded.

Notification No. 18/2009 – ST dated 07.07.2009 – Services in relation to ‘transport of goods by road’ and ‘commission paid to foreign agents’ exempted from service tax subject to certain conditions

All taxable services specified in column (3) (‘specified services’) received by an exporter and used for export of goods (‘said goods’), shall be exempt from levy of service tax under section 66 and section 66A.

Serial No.	Classification	Description of the taxable service	Conditions
1	2	3	4
1.	Transport of goods by road in a goods carriage- 65(105)(zzp)	Service provided to an exporter for transport of the said goods by road from any container freight station or inland container depot to the port or airport, as the case may be, from where the goods are exported; or Service provided to an exporter in relation to transport of said goods by road directly from their place of removal, to an inland container depot, a container freight station, a port or airport, as the case may be, from where the goods are exported.	The exporter shall have to produce the consignment note, by whatever name called, issued in his name.
2.	commission paid to foreign agents -65(105)(zzb)	Service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him.	(1) The exporter shall declare the amount of commission paid or payable to the commission agent in the shipping bill or bill of export, as the case may be. (2)The exemption shall be limited to 1% of the free on board value of export goods for which the said service has been used. (3) The exemption shall not be available on the export of canalized item, project export, or export financed under lines of credit extended by Government of India or EXIM Bank, or export made by Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary. (4) The exporter shall submit with the half yearly return after certification of the same as specified in clause (g) of the proviso together with: (i) the original documents showing actual payment of commission to the commission agent; and (ii) a copy of the agreement or contract entered into between the commission agent located outside India and the exporter in relation to sale of export goods, outside India.

General conditions to be satisfied for availing the above exemption:-

(a) Exemption shall be available to an exporter who,-

(i) informs the Assistant Commissioner/Deputy Commissioner of Central Excise, having jurisdiction over the factory or the regional office or the head office, as the case may be, in Form EXP1, before availing the said exemption;

(ii)   is registered with an export promotion council sponsored by the Ministry of Commerce or the Ministry of Textiles, as the case may be;

(iii) is a holder of Import-Export Code Number;

(iv) is registered under section 69 of the said Act;

(v) is liable to pay service tax under section 68(2), read with rule 2(1)(d)(iv) or rule 2(1)(d)(v) of the Service Tax Rules, 1994, for the specified service;

(b) the invoice, bill or challan, or any other document issued by the service provider to the exporter, on which the exporter intend to avail exemption, shall be issued in the name of the exporter, showing that the exporter is liable to pay the service tax in terms of item (v) of clause (a);

(c) the exporter availing the exemption shall file the return in Form EXP2 every 6 months of the financial year, within15days of the completion of the said 6 months;

(d) the exporter shall submit  the half yearly return,  with the documents in original specified in clause (b) and the certified copies of the documents specified in column (4) of the said Schedule;

(e) the documents enclosed with the return shall contain a certification from the exporter or the authorised person, to the effect that taxable service to which the document pertains, has been received and used for export of goods by mentioning the specific shipping bill number on the said document.

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

(g) where the amount of service tax in respect of the service specified against serial No. 2 of the Schedule exceeds 1% of the free on board value of the export then, the amount in excess of the said 1% shall be paid within the period specified under rule 6 of the Service Tax Rules, 1994.

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