Is the sales tax department justified in holding the VAT (value added tax) refund claims of special economic zone (SEZ) units that export their entire production (cannot avail set-off facility due to absence of domestic sale) for several months, for the reason that they can release such refunds only after cross verification with the domestic tariff area (DTA) supplier of goods to SEZ units as to whether he has deposited the VAT collected from the SEZ unit with the government? Does the VAT Act recognise holding VAT refunds for such reasons? If not, can we challenge this in a court of law?
When the VAT law provides for refund and the documents specified in the relevant rules are submitted, refund should not be denied. The officers sanctioning the refund must be satisfied on the basis of documents submitted alone and should grant the refund. If any DTA dealer has given you the tax invoice and has collected the tax but has not deposited the tax with the government, it is for the department to take up the matter with that dealer and not delay your refund.
The problem you have pointed out seems to be a result of some officers inventing their own safeguards. I suggest that you approach the government through your association or export promotion council to issue necessary instructions for grant of refund on the basis of documents that you submit alone and get whatever verification necessary to be got done later. A better representation is to ask for VAT exemption on goods sold to SEZ from the DTA. The courts may be wary of interfering when there is no allegation of illegal denial of refund, but may be inclined to give orders for disposal of the refund claim within a specified time limit.
We have a custom bonded warehouse and we import material which is again sold in the local market. Is the CVD exemption available for sale from the bonded warehouse as well? We also sell to various government universities and research institutes (under 51/96 Notification), who are claiming exemption from 4 per cent SAD. Are these government universities and research institutes (under 51/96 Notification) at all exempted from SAD component? Also, apart from SAD exemption, can they also be given benefit of CVD?
Under notification no. 51/96-cus dated 23.07.1996, basic duty is 5 per cent and CVD is exempted. Even the 4 per cent SAD is exempted. You can claim benefit under that customs exemption notification even in respect of goods that are warehoused, at the time of filing the ex-bond bill of entry. Full duty has to be paid, if there is no exemption notification.
As Indian agents of a foreign company, we earn commission in foreign currency. Can we claim duty credit scrips under the Served From India Scheme?
In my opinion, you fall within the definition of Service Provider given in Para 9.53(i) of the Foreign Trade Policy (FTP). Your service falls in S.No. 4A of Appendix-10 of Handbook of Procedures, Vol. 1.
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