'Duty credit scrips can be used to regularise defaults in export obligation'

Under S.No.(3) of Service Tax Notification No.12/2012-Service Tax dated 17.03.2012, “services by an entity registered under Section 12AA of the Income Tax Act, 1961, by way of Charitable Activities”, is exempt from Service Tax. Further, according to Para 6.4(v) of Taxman’s Service Tax Ready Reckoner, “advancement of any other object of general public utility up to a value of (a) eighteen lakh seventy-five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty-five lakh rupees during 2011-12 and (b) twenty-five lakh rupees in any financial year subject to the condition that total value of such activities had not exceeded twenty-five lakh during the preceding financial year’ is exempt from Service Tax, if such trusts are registered under Section 12AA of Income Tax Act. As our Association, incorporated under Section 25 of the Companies Act 1956, is registered under Section 12AA of the Income Tax Act, and our income from membership subscription (we have only 125 members, all located in an SEZ) is within the above limits”, can we claim exemption from levying service tax to our members?

The notification you refer to has been superseded by notification no. 25/2012-ST dated 20.06.2012, where the services you refer to appear at S.No.4. Para 2(k) of the said notification defines “charitable activities”. From a perusal of the activities listed therein, including ‘advancement of any other object of general public utility…’ , I am of the opinion that the services you render to your members, including those not relating to any public utility, are not covered under the expression ‘charitable activities’.

What is the advantage/benefit to importers if the import duty is paid through Focus Product Scrips? These scrips are available in the market below their face value.

Quite obviously, you save money. For example, if you buy a duty credit scrip with a face value of Rs 100 at say Rs 80, you can use that scrip to pay duty of Rs 100 on your imported goods. So, you pay Rs 80 to the seller of the scrip but save duty of Rs 100, which is a neat gain of Rs 20. You can also use it to regularise defaults in export obligation under schemes covered in Chapter 4 and 5 of the Foreign Trade Policy. Further, although the Customs do not collect the duty for the amount debited in the scrip, you can take Cenvat Credit of the CVD and SAD component.

Can we procure domestically produced goods from a trader against scrips issued under the Served From India Scheme (SFIS)? And where can we find the necessary procedures for the same?

You can claim excise duty exemption for goods cleared under Served From India Scrips at the time of clearance from the factory of the manufacturer under notification no. 34/2006-CE dated June 14, 2006 as per procedures laid down in CBEC Circular no. 837/14/2006-CX., dated 3-11-2006, and not when you buy from a trader after clearance.

 

 

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