Assocham seeks clarity on service tax refund

The revenue department should notify the provision to allow refund of service tax paid on input service used in final products that are cleared for export.

This is because the absence of a notification is coming in the way of manufacturers getting a refund, according to the Assocham.

The chamber, in a representation to the revenue department, pointed out that Rule 5 of the Cenvat Credit Rules 2004, provided that a manufacturer would be allowed the refund if Cenvat credit in respect of the input services so used, was not utilised by a manufacturer for paying excise duty on any final product cleared for home consumption.

The rule further states that the refund of such amount would be subject to safeguards notified by the government.

J K Mittal, co-chairman of the Chamber's indirect tax committee, pointed out that the government had already provided facilities for rebate or refund of duties paid on input/materials used in the manufacture or processing of goods, which were exported.

"Therefore, facilities of providing rebate/refund of service tax paid on input service used in the final products, which is cleared for export, should also be considered," he added.