Exemption of Service Tax on certain specified services

NO.CLE/POL/CIRCULAR/2008 tax/2008                                                               April 4, 2008

Members of the Council.

Sub : Exemption of Service Tax on certain specified services

Dear Member,

As you are kindly aware, the Department of Revenue announced exemption on Service Tax on certain specific services like services provided to an exporter by insurer, by ports, by technical testing and analysis agencies, by inspection and certification agencies and by transport operators for movement of goods from inland container depot to the port of export vide Service Tax Notification No.41/2007 dated 6.10.2007.

Subsequently, Service Tax exemptions were also notified for specialized cleaning services and Services provided for storage and warehousing vide Notification No. 42/2007 dated 29.11.2007.

Recently, the Government has issued one more Notification no.3/2008 dated 19.2.2008 exempting some more services from the levy of Service tax, which include certain specified courier and transport services.

These exemptions were subject to the certain conditions, including the following.

1. 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;



2. 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;



3. The exporter claiming the exemption has actually paid the service tax on the specified services;



4. No CENVAT credit of service tax paid on the specified services used for export of said goods has been taken under the CENVAT Credit Rules, 2004;



5. The said goods have been exported without availing drawback of service tax paid on the specified services under the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 *



6. 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.

( * members may note that as the Service Tax was already factored in the All Industry Rate of Duty Drawback, the condition that the goods should have been exported without availing drawback of service tax paid so as to avail Service Tax Exemption has been specified at point no. e above)

Further, the exemption was given by way of reimbursement of Service Tax paid upon submission of claims on quarterly basis.

The Department of Revenue has now issued a Notification No. 17/2008 dated April 1, 2008, extending Service Tax Exemption to some more services including services of Customs House Agent, Commission Agent and services provided in relation to collection of bills, export letters of credit etc., The said Notification No.17/2008 is enclosed herewith for information and reference of members. The Service Tax exemption given vide Notification No. 17/2008 will also be subject to the conditions mentioned above and also other related conditions which were specified in the Service Tax Notification No. 41/2007 dated 6.10.2007.

With regards

Dr. K. Elangovan
Executive Director