Advance Service tax payment and Service tax on bad debts

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This query is : Resolved

kamal (Querist)

10 October 2009 Dear Sir,
One of our clients paying Service tax on billing basis i.e. he paid whatever he service tax charged on previous month billing irrespective of receipts of bills payment..
(He is paying service tax on monthly billing i.e. at the end of month he calculate service tax on previous months billing and same depositing to Department.)

When i audited clients accounts i faced some problem:-
1. Payment of Service tax:-
As per service tax Act, there is no Specific Rule/Section that service tax can be paid on Billing. As per Act it will considered Advance Payment of Service tax as per Rule 6 of service tax Rule, 1994. If we paid Advance service tax we are required to give details of Advance payment and adjustment in Return of Service tax as per section 70.
Details of such adjustment and reason their of should be intimated to Jurisdictional Range Superintendent with in 15 days.
However Clients had not taken any apporval and no adjustment shown in his return.

2. When he write of any debtors bill he also write back service tax amount charged on bill at the time of billing irrespective period of bill.(Although he had been paid service tax at the time of Billing on the same bill but now he is taking credit at the time of write back of bill)

3. He is taking 100% Cenvat credit on input service received by him on Payment of service.

Please suggest on the above all three matter . Is it can be carried over or not in future (as per clients in this field every service provider following this practice)

Thanks & Regards
Kamal

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)

12 October 2009 In my view it is not an advance payment. Since the amount paid is equal to the billing amount and which you would receive in future.The debit and credit notes are aceptable under ST.
You can take input credit so far it relates to your oupt services

kamal

kamal (Querist)

12 October 2009 Dear Sir,
I Read Service tax provisions clearlity as i can read but i didnot find the soluation. As per Service tax Act it is Advance. Is there is any case law or Circulation or any specific section regarding the matter.

One other expert have an opinion on the matter that it is benificial for revenu that we are paying on billing basis.As we are paying on billing basis it is not be called Advance ?

On taking credit of owns bills at the time of write off/ Bad debts. They opinioned that he shuould claim for refund??

But still i am not clear about the matter

Regards
Kamal

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