New service tax circular would expedite refund claims: Fieo

COMMENTING on the recent service tax circular for claiming refunds through ICES with regard to specified services availed of for export of goods, Mr Ramu S. Deora, President of Federation of Indian Export Organisations (Fieo), said that it would make refunds quicker, considering that the exporter will have to declare his intent on the shipping bill, which would be processed just like the drawback shipping bill.

Expressing confidence that the new dispensation under ICES would create an enabling environment for service tax refunds, the Fieo chief pointed out that getting refunds had become difficult following the tax offset facility under Rule 2 of the Cenvat Credit Rules, due to the merger of service tax credit with Cenvat credit.

As regards the non-drawback shipping bills, Mr Deora made it clear that once the Export General Manifest (EGM) is filed, the bills would move separately, get processed and sanctioned on the ICES. "In either case, shipping bill itself will be the basis for claiming refund".

Mr Deora said the draft circular also spoke of plans for creating a separate service tax directory in the ICES for the specified services, along with the specified rate for each of these services. "These rates would be similar to an AIR (all-industry rate), which is being proposed for these services. If an exporter wants a refund on the basis of actual input taxes paid, the ICES route cannot be used and filing through field formations would be required", Mr Deora explained.

The Fieo chief also mentioned that scrolling for both drawback and service tax would take place together in the case of drawback claims. "For non-drawback claims, the service tax refund is scrolled once the EGM is filed", he said.

Source : Exim News Service - MUMBAI, Sept. 12