Retaining amount of service tax

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2016 Dear Sir/Madam,
We are a PVT. Ltd. company, we are receiving professional services from an individual and for which individual is raising an invoice every month along with service tax, Ex: for Rs. 2lakhs- ST@14.5%- Rs.29,000. Hence bill value would be Rs. 2,29,000/- So now the querry is that, Individual would pay the service tax quarterly, where in we as a company book the invoice and take input credit every month for the invoice raised.

So in order to treat it as a checklist, Is it possible, whether the company can retain the service tax with it, instead of paying it to individual every month??? Because in case, there may be chance of discontinuance of service in future, we would not be able to check whether the individual would have paid the amount to the dept. for which company has taken input credit...

Let me briefly explain in an example...
Month - April Invoice value - Rs.2,29,000/-(Basic + ST)
Month - May Invoice value - Rs. 2,29,000/-(Basic + ST)

So, If in case the service is discontinued in the June month (say from beginning of June month), Company would have already booked the invoices for 2 months which are raised by individual and taken input credit for that. So as individual would pay ST to dept. quarterly, Company would not be able to make sure that whether the ST has been paid by individual or not??which would create a huge problem from dept. to the company.

Now the thing is that, whether the company would retain the ST of (Rs.29K + 29K) with it, and would pay to the individual at the time of payment to dept.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 May 2016 If invoice is raised with service tax No. you have to pay the amount including service tax. Service tax Dept will take action for service tax collected not remitted to the dept.

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