Payment of Service Tax

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This query is : Resolved

Bimal Thacker (Querist)
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16 December 2010 Company A - main activities are a) repairs and services in which they use some spare parts and b) selling spare parts. Various bills are combined in which sale of services and sale of goods are mention. A single customer may have various bills of sale of goods and services.

It is not possible for company to maintain the track of payment received for goods or services. The company on monthly basis deposits service tax on the basis of bills issued during the month (payment received in next month or not received). Whether the same is acceptable to department?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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16 December 2010 The payment of service tax on receipt basis and taking taking of input credit on payment basis has been recommended mainly to avoid problems to the service provider later.\

It is very, very difficult to get a refund of excess tax deposited from the Central Excise Department, since it is almost impossible to prove that the tax so deposited has been refunded to the original payee and the concept of "unjust enrichment" does not apply.

In case subsequently, if some of the debtors become a defaulter, the assessee cannot claim a refund of the tax paid. However, if the payments are within the same ST-1 period, the assessee can adjust the excess tax paid in the earlier months with the later months, but not vice versa.

The department will gladly accept any deposit of tax, but it is for the service provider to beware, since a refund of tax excess paid is almost NIL.