TN31/07

SUBJECT: Notification No. 39/2007-Service Tax dated 12/9/07 and 40/07 dated 17/9/07 - Communication of – reg.

Notification No.39/2007-Service Tax dated 12/9/2007 amending Service Tax Rules and Notification No.40/07 dated 17/9/07 exempting certain taxable services specified in the schedule received by an exporter and used for export of goods, issued by the Ministry of Finance, are communicated herewith for information and necessary action.

All the Trade associations are requested to bring the contents of the Trade Notice to the attention of their members, in particular, and the trade and all other concerned in general.

3. Copy to: The Superintendent, Computer Section for publishing in the Departmental Website.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R. (E). In exercise of the powers conferred by sub-sections (1) and (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely :-

(2) They shall come into force on the day of publication in the Official Gazette.

2. In the Service Tax Rules, 1994, in rule 6, for sub-rule (1), the following shall be substituted, namely:-

(i) by the 6th day of the month, if the duty is deposited electronically through internet banking; and

immediately following the calendar month in which the payments are received, towards the value of taxable services:

Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, immediately following the quarter in which the payments are received, towards the value of taxable services:

Provided further that notwithstanding the time of receipt of payment towards the value of services, no service tax shall be payable for the part or whole of the value of services, which is attributable to services provided during the period when such services were not taxable:

Provided also that the service tax on the value of taxable services received during the month of March, or the quarter ending in March, as the case may be, shall be paid to the credit of the Central Government by the 31^st day of March of the calendar year.” .

Note.- The principal rules were notified vide notification No. 2/94-Service Tax, dated the 28th June,1994 and published in the Gazette of India, Extraordinary vide number G.S.R.546 (E), dated the 28th June, 1994 and were last amended vide notification No. 28/2007-Service Tax, dated the 22^nd May, 2007 vide G.S.R.374(E), dated the 22^nd May, 2007.

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, IN PART II, SECTION 3, SUB-SECTION (i)]

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in the Schedule (hereinafter referred to as specified services) received by an exporter and used for export of goods (hereinafter referred to as said goods), from the whole of the service tax leviable thereon under section 66 of the said Finance Act, subject to the following conditions, namely:-

(a) the exemption shall be claimed by the exporter of the goods for the specified services received and used by the exporter for export of the said goods;

(b) the exemption claimed by the exporter shall be provided by way of refund of service tax paid on the specified services used for export of the said goods;

(d) the exemption or refund of service tax paid on the specified services used for export of said goods shall not be claimed except under this notification.

2. The exemption contained in this notification shall be given effect to in the following manner, namely:-

(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the exporter and used for export of the said goods, and such person shall not be eligible to claim exemption for the specified services:

Provided that where the exporter of the said goods and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;

(b) the exporter shall claim the exemption by filing a claim for refund of service tax paid on specified services:

(i) the manufacturer-exporter of the said goods shall file the claim for refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, having jurisdiction over the factory of manufacture or warehouse, and

(ii) the exporter, other than a manufacturer-exporter, shall file the claim for refund to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the registered office of such exporter,

(c) the claim for refund shall be filed on a quarterly basis, within sixty days from the end of the relevant quarter during which the said goods have been exported:

Provided that the said goods shall be deemed to be exported on the date on which the proper officer of Customs makes an order permitting clearance and loading of the said goods for exportation under section 51 of the Customs Act, 1962 (52 of 1962);

(ii) payment of service tax on the specified services for which claim for refund of service tax paid is filed;

(e) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself that the said services have been actually used for export of said goods, refund the service tax paid on the specified services used for export of said goods:

Provided that where any refund of service tax paid on specified services used for export of said goods has been 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 (42 of 1999), including any extension of such period, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made thereunder, as if it is a recovery of service tax erroneously refunded.

Sr. No.	Taxable Services
Sr. No.	Classification under Finance Act, 1994	Description
(1)	(2)	(3)
1.	Section 65(105)(zn)	Services provided for export of said goods
2.	Section 65(105)(zzl)	Services provided for export of said goods
3.	Section 65(105)(zzp)	Services provided for transport of said goods from the inland container depot to the port of export
4.	Section 65(105)(zzzp)	Services provided for transport of said goods from the inland container depot to the port of export

Government has issued Notification No. 40/2007-ST dated 17.09.2007 providing refund of service tax paid by exporters on the following four taxable services, which are not in the nature of “input services” but could be linked to export goods.

(i) Port Services provided for export. (Section 65[105][zn] of the Finance Act, 1994)

(iii) Services of transport of goods by road from ICD to port of export provided by Goods Transport Agency. (Section 65[105][zzp])

(iv) Services of transport of export goods in containers by rail from ICD to port of export. (Section 65[105][zzzp])

2. Service tax paid by exporters on input services used for export goods is refunded under the existing schemes. Drawback scheme also factored service tax paid on input services used for export goods.

3. The issue of extending refund of service tax paid on taxable services, which are not “input service” but could be attributable to export goods was examined. Unlike goods, Services are intangible in nature. Hence, post audit verification to establish linkage of use of service with export requires a simple and verifiable method. Government held discussion with the stake-holders and identified the above mentioned taxable services for which refund could be provided wherever use of the said taxable services could be linked to exports.

4. The said notification is available on the CBEC website www.cbec.gov.in. For details, the notification may be referred to