Refund of Service Tax

Section 83 of the Finance Act, 1994 makes certain provisions of the Central Excise Act, 1944 (CEA) applicable to service tax. Section 11B of CEA provides for refund which is also applicable to refunds of service tax.

Claim of refund of service tax should be filed in the prescribed format; i.e. in Form R to the Assistant Commissioner or the Deputy Commissioner before the expiry of one year from the relevant date. Here, “relevant date” means the date of payment of tax or date of purchase.

If the services have been exported or input services have been used in export of services, then relevant date will be:

1.  If the export is by sea or air, the date when the ship or aircraft leaves India,

2.  If the export by road, the date on which the goods pass the border

3.  If the dispatch is by postage, then it will be the date when the goods are dispatched by the post office.

The application for refund should be submitted with relevant documents evidencing the refund claim. In short, the applicant should all such evidence to prove that the tax amount was borne by him and not passed on to any other person further. This is commonly known as unjust enrichment. If proved that the incidence of tax has been passed on further to any other person, then the amount shall be transferred to the Consumer Welfare Fund.

It should be noted here that, the period of one year will not be applicable if the payment has been made under protest.

This link gives a list of documents to be submitted with the refund application

C.B.E.C. has instructed the respective officials to deal with genuine refund applications as early as possible. The refund claim shall be finalized within a minimum period of 30 days from the date of filing of the refund. The C.B.E.C. will conduct a pre-audit of refund claims through Assistant/Deputy Commissioner (Audit).

In case the refund granted is not passed to the applicant within 3 months from the date of application, then the applicant is entitled to get interest on the refund amount at least @ 5% but not exceeding 30% per annum.

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