What is EOU?
Ø
The EOU scheme was introduced in the year 1980
vide Ministry of Commerce resolution dated 31st December 1980 . The purpose of
the scheme was basically to boost exports by creating additional production
capacity. The EOU scheme is complementary to the EPZ scheme, except that it is
widely dispersed in location, unlike EPZs, which are set up at specific
locations.
Salient Features of EOU-
Benefits
Ø
The Export
Oriented Units (EOUs) and units in Export Processing Zones (EPZs), Electronic
Hardware Technology Park (EHTP), Software Technology Park (STP) and Special
Economic Zones (SEZ) will be entitled to full reimbursement of Central Sales
Tax (CST) paid by them on purchases made from the Domestic Tariff Area (DTA),
for production of goods and services as per Exim Policy.
Applicable Laws
Ø Foreign Trade Policy.
Ø Central Sales Tax Act, 1956
Ø The Central Sales Tax (Registration And
Turnover) Rules, 1957
Pre requirements for claiming
refund
Ø CST Registeration (Sec. 7 of CST Act)
Ø Purchase from DTA
Ø Purchase are essential for export
Ø Purchase used for export production
Ø CST is paid by bank account maintained by
EOU/EPZ/EHTP/STP/SEZ unit
Procedure for claiming refund
Ø Application as per Annexure I
Ø Apply to Development Commissioner of the
EPZ/SEZ concerned or the designated officer of the EHTP/STP
Ø Eligible CA firm’s certificate as per
Annexure II
Ø 3 way check (original invoice of the
supplier and proof of payment and its reconciliation with ‘C’ Form)
Ø Copy of material inward register (quantity,
the source of purchase and the C Form)
Ø Copy of Form C + counter foil (The
reimbursement will be limited to the payment of CST against C Form)
Ø Only one consolidated claim for the quarter
Ø Application to be within six months from the
end of quarter
Ø In case of procurement of goods against
payment in instalments, the CST
reimbursement claim may be made in the quarter in which the full payment has
been effected against the invoice/bill.
Ø
The claim
for CST reimbursement for the amount below Rs. 100/- on any single invoice
shall not be entertained.
Deliverables for claiming
Refund
Ø Annexure I - Application
Ø Annexure II – CA Certificate
Ø Copy of CST registeration certificate
Ø Copy of C Forms + counter foils
Ø 3 Copy of Specimen signatures of authorized
persons
Points to be noted post
claiming refund
Ø Material inward register is subject to
periodical check by authorized officer
Ø All the claims are subject to post audit
Ø Preserve all records for 3 years (Original
invoices, Bank receipts, C Forms etc)
Practical difficulties
Ø Maintain 3 way check for each invoice is
tiresome process even after using ERP
Ø Maintain material inward register for audit
by authorized officer – onus of proof is on us
Ø Proper documentation is to be preserved for
post claim audit.
Ø Preserve all records for 3 years (Original
invoices, Bank receipts, C Forms etc)
Ø Only one consolidated claim per quarter.
Penalties
Ø
In case
some glaring error or irregularity is detected against any unit in claiming CST
reimbursement, action to recover the amount paid and levy penalty would be
taken under FTDR Act against such unit
Ø
Any dues of the Government viz. arrears of
Lease rent, amount on account of a Court’s decree or Income tax recovery note,
etc. will also be deductible from the claim amount or it can be set off from
the subsequent payment.
