Registration of Service tax

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Abdus Samad Ansari (Querist)
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27 December 2010 One of my client has been wrongly registered under the wrong Head of taxable Service which he want to rectify.
He has obtained ST-2 service tax registration form i week ago where he is allready registered under wrong head
Please provide me details of CONSEQUNSES IF HE IS REGISTERED UNDER WRONG HEAD. and wheather it is necessary to rectify his head of Taxable Service.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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29 December 2010 It is very difficult to give a generalized reply.

However, the following are the consequences of registration under wrong head:
(a) At a subsequent date, if the Department issues a notice for non-registration, they would be within their powers. In that case, the sums paid into the treasury would not be available as credit and the whole sum has to be repaid alongwith interest aqnd penalty.
(b) Your customers may have problem in claiming Input Credit since there may not be a one-to one relationship between the service you are supposed to have rendered and their output service.
(c) It may be that your particular service is entitled to some abatement / exemption, which you cannot claim if you are registered under the wrong head, resulting in extra payment of service tax.
(d) Similarly, the vice versa may also occur. You may claim the abatement / exemption available to the wrong service you are registered under, resulting in duty escaping assessment and fradulent claim for relief, and the attendant consequences.

It would be in your interests to file and amended ST-1 and rectify the above error and obtain a fresh ST-2 classifying your servic under the correct head.

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