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    Refund Claim of Cenvat Credit in Relation to Input Services on Exports - Documentation and Other Procedural Aspects

    Introduction 

    In India, Excise Duty/Service Tax on export of goods/services is exempted; A simple question arises in mind that 

    “If export of services are exempted then what is the use of Cenvat credit lying in the books of Accounts?” 

    Rule 5 of Cenvat credit rules, 2004 (CCR Rules, 2004)provides an opportunity to the service provider/manufacturer to utilize the accumulated CENVAT credit relating to export of goods or services for the payment of service tax on domestic output services and excise duty on final products cleared within India and in case any credit is left after making the stated adjustments the service provider/manufacturer can opt for refund of CENVAT credit. 

    Procedure to be followed with respect to input services in refund claim of Cenvat credit Definition of input service as per CCR Rules, 2004 

    "Input service" means any service used for providing an output service or used in the production of the final product.

    CENVAT credit can be taken on all the eligible input service invoices dated during the respective quarters though the services have not been received during the quarter .Credit should be reversed if the payment is not made to the vendor within 3months from the invoice date and can be claimed subsequently in the month of the payment. 

    Credit is available even for advance payments also for which invoice are received, except in case where the services are not received at a later point of time. 

    In case of services relating to reverse charge mechanism, credit can be taken at the time of payment of service tax. 

    Documents to be prepared with respect to input services to claim refund 

    • Month wise input service statement containing the list of Input service invoices and their payment details in chronological order. 
    • Invoices should be serially numbered as per month wise input service statement.
    • Statement providing consolidated Service-wise list of Input Invoices with Subtotals.
    • Challans for service tax paid on reverse charge basis, if any. 
    • Bank statements as proof of payment to the vendor and the line items regarding to the payments to be highlighted and properly mapped with Input Invoices. 
    • Reconciliation statement between the CENVAT credit taken on input services for respective months in Service Tax return and actual claim of input services.(Lower of the two is allowed as refund). 

    As per recent Trade Notice. 01/2016 dated 10.08.2016 issued by Office of the Commissioner of customs, central excise and service tax: Hyderabad-IV Commissionerate, Posnett Bhavan, Hyderabad, in case of voluminous input service invoices, the assessing authority will demand the assessee to submit a Cenvat credit statement in the specified format as stated in ANNEXURE I. 

    Sample verification of invoice shall be done in the following manner: 

    • All invoices constituting 80% of the Cenvat Credit taken in the quarter shall be identified and scrutinized for their correctness 
    • In respect of the balance invoices, random verification of 10% of the balance invoices or 25 invoices whichever is higher, covering different vendors and sensitive nature of services. 

    The above selection/identification shall be done under the supervision of the Assessing authority and the selected invoices shall be highlighted in the Cenvat credit statement.

    The details about the selection of invoices shall be recorded in the specified format in the note-sheet as stated in ANNEXURE II.

    As per the requirement of the Assessing authority, 100% verification of invoices will be done once in a year. 

    Conclusion 

    Thus following points need to be carefully addressed in refund claim 

    1. Ensure that the amount claimed in Form A is equal to the amount stated in respective ST return. 
    1. If payments are not made within three months, the CENVAT credit is to be reversed and claimed in the month of payment. 
    1. Reverse charge services are to be claimed after making payment of service Tax to the Government. 
    1. Segregation of invoices to be done as per trade notices for claiming refund. 

     

    ANNEXURE I 

    S.No

    Original

    Vendor

    Classification

    Invoice

    Invoice

    ST Regn

    Invoice

    Cenvat credit

    Date of payment to

    No of days

    Remarks

     

    Sl. No

    Name

    of invoice

    Number

    Date

    Number

    Amount

    involved

    service provider as

    between

     

     

    as per CCR

     

     

     

     

     

     

     

    evident from

    invoice date and

     

     

     

     

     

     

     

     

     

     

    Bank statement

    date of payment

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    ANNEXURE 2

     

    Name of the

    Amount of

    Amount of Cenvat

    Total number of invoices

    Total number of invoices

    Total number of balance

    % of refund

    Refund claimant

    refund claim

    credit taken in the

    filed in the refund claimed

    constituting 80% of the

    invoices selected as

    amount covered

     

     

    quarter

     

    claim amount

    stated above

    by the selected

     

     

     

     

     

     

    invoices

     

     

     

     

     

     

     

      

    "Hapiness can exist only in acceptance"

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