Can Service tax be filied on Mercantile Method

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jayaraman subramanian (Querist)
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21 October 2008 Dear All.

I am working as an accountant in a Ltd Co.,

The day i took charge of the assignemnt, Our company was preparing, paying tax,if any as service provider and filing data for hlf yearly return under Service Tax Act on the basis of sales bills raised i:e mecantile system since registration.

I hv not change the methodolgy, since i dont find any reason to change., infact from the day i took the above assignemnt, we hv never paid service tax on services rendered by our company and hv been adjusting against service tax payment against set off available.

further officer in charge at that time hv justify his stand by reasoning that by paying service tax as and when bill are raised, it can save time for preparing unnecessary data and reconcilaition statement every month, since data is readily available from sales bills raised and accounted in books secondly there is no cash outflow for the company , since set off amount at our disposal, hence why spend time on unproductive information for filing return under service tax.

But when my new account's manager took charge, she told me to file Service Tax on Cash Basis as per Under Service Tax Rules 1994.

Rule 6: Payment of service tax
The service tax shall be paid to the credit of the central govt by the 5th of the month immediately following the calender month in which payments are received , towards value of taxable service.

But when i explain this to my manager that Corollary is payment of service tax to govt can be deferred till the receipt of the value of taxable services provided however i:e one can still opt and their is no barred for the assessee to make payment of tax on as and when billed. In such case dept will never make any fuss nor can raise any demand nor any notice on the subject matter

She is not aggreing with me and asking for the notification of which ST can be paid on mercantile method

Can any one give me the notification which state that ST can be paid on Mercantile Method

Regds
Jayaraman

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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21 October 2008 Rule 6 read with column F(1)(a) of Form ST-3 gives the answer.

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Can Service tax be filied on Mercantile Method

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