The Export of Services, Rules, 2005 specifies 3(Three)categories of cross border transaction of services and conditions that will be construed as Export of services in cases of:

As per Rule 3(2)(a) of the Export of Services Rules 2005, a taxable service shall be treated as export of service if such service is ‘provided from India and used outside India’. [ Please Refer : Rule 3(2) of Export of Service Rules, 2005. ] 

Even if an Indian architect prepares a design in India for a property located in U.K. and hands it over to the owner of property having his business and residence in India, it is to be to be presumed that service has been used outside India. Thus, Service Tax would not be levied.  

For the services that fall under List 3 [Rule 3(1)(iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase ‘used outside India’ is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for List 3 services [Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. 

[ Please Refer : Service Tax Circular No. 111/05/2009 ST, dated 24-02-2009. ]

If a foreign national pays in convertible foreign currency for service received by him in India, and he returns to foreign country, it shall not be treated as export, as services are rendered in India, even though it is rendered to any foreign national and he pays in convertible foreign currency.

Taxable services may be exported without payment of service tax, provided the conditions specified in Export of Service Rules, 2005 are fulfilled.

Where service tax has already been paid on export of services to countries (other than Nepal and Bhutan), rebate/refund of such service tax, can be availed by the exporter. [ Please Refer : Service Tax Notification No. 11/2005-S.T., dated 19-4-2005. ] 

Where service tax has already been paid on the inputs and input services used in export of services to countries (other than Nepal and Bhutan), rebate/refund of such excise duty on inputs and service tax paid on input services can be availed by the exporter. [ Please Refer : Service Tax Notification No. 12/2005-S.T., dated 19-4-2005. ]

Where taxable services are exported without payment of  Service Tax, but CENVAT Credit was availed, the refund of accumulated CENVAT Credit (if the same cannot be fully used for payment of Service Tax), may be claimed by exporter. [ Please Refer : Rule 5, CENVAT Credit Rules, 2004. ]

Service tax paid on the input services used in export of goods is refundable to exporter by way of rebate/refund. [ Please Refer : Notification No. 41/2001-Central Excise (Non Tariff), dated the 26th June, 2001. ]

CENVAT Credit accumulated on such input services is also refundable subject to the observance of certain prescribed procedures. [ Please Refer : Rule 5, CENVAT Credit Rules, 2004; Notification No. 5/2006-C.E. (Non Tariff), dated 14th March, 2006. ]

The refund of unutilised input service credit will be restricted to the extent of the ratio of export turnover to the total turnover for the given period to which the claim relates Maximum refund = Total CENVAT credit taken on input services during the given period × export turnover ÷ Total turnover 

Illustration :If total credit taken on input services for a quarter = Rs. 100,Export turnover during the quarter = Rs 300, Total Turnover during the quarter = Rs 500

Solution : Refund of input service credit under Rule 5 of the CENVAT Credit Rule, during the quarter = 100*300/500 i.e. Rs 60

Few services, which are not in the nature of input service but are linked to export of goods, refund of service tax paid on these services is admissible to the exporter.  

To claim rebate or refund of CENVAT Credit, application has to be filed in the Central Excise or Service Tax Division/Group where the assessee is registered.

Application for filing a claim of rebate of Service Tax and cess paid on taxable services exported should be filed in Form No. ASTR-1 [ Please Refer : Notification No. 11/2005-ST. ]

Application for filing a claim of rebate of duty paid on inputs, Service Tax and cess paid on input services should be filed in Form No. ASTR-2 [ Please Refer : Notification No. 12/2005-ST. ]

To claim refund of Service Tax paid on taxable services used by the exporter of goods the manufacturer-exporter has to file the application to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, having jurisdiction over the factory of manufacture or warehouse. [ Please refer : Service Tax Circular No 101/4/2008-ST dated 12-5-2008]