Service tax liability - service bill canceled
This query is : Resolved
09 February 2014
Hi-
Please advice
Service Invoice raised in Aug’13
liability of Service tax paid on 05.09.13
Service tax Return for the period Apr’13 to Sept’13 has been submitted.
Due to incomplete work, party has rejected entire bill & reduce price & asked for new one, we have Submitted bill for Certified Value in Jan’14 with applicable Ser tax, . Would you please advice how to adjust Service tax paid in Aug Bill ?, where we have to show it? If we pay Service tax of Jan’ bill then what would be earlier Service tax which we have shown in Ser Tax Return
Pls urgently reply
Please advice
Service Invoice raised in Aug’13
liability of Service tax paid on 05.09.13
Service tax Return for the period Apr’13 to Sept’13 has been submitted.
Due to incomplete work, party has rejected entire bill & reduce price & asked for new one, we have Submitted bill for Certified Value in Jan’14 with applicable Ser tax, . Would you please advice how to adjust Service tax paid in Aug Bill ?, where we have to show it? If we pay Service tax of Jan’ bill then what would be earlier Service tax which we have shown in Ser Tax Return
Pls urgently reply
10 February 2014
Show the tax as arrear payment in the Return for the period Oct'13-Mar'14
10 February 2014
Issue Credit Note for the excess amount billed in August. Disclose the same in the ST-3 Return for Oct’13 –Mar’14 under the head other deduction and take credit of the excess service tax remitted for August.
10 February 2014
Dear Sri V.Parakh,I do not understand, It is not arrears,The Old Inv. of Aug.has canceled & issued fresh Inv in Jan, We have paid Ser tax of Aug & as well as Jan Inv.As far as Income is concerned no matter, but what about Ser tax which we have shown in ST-3 return Apr- Sept qtr.
24 July 2025
Gotcha, this is a common issue when invoices get canceled and revised after service tax is already paid and returned. Let me break down the correct treatment for you:
---
### Scenario Recap:
* Original invoice raised in **Aug 2013**, service tax paid and shown in **Apr-Sept 2013 ST-3 return**.
* Invoice later **canceled** due to incomplete work.
* New invoice raised in **Jan 2014** for reduced value, and service tax paid again.
* You want to know how to adjust the **service tax already paid for Aug invoice** in your returns and how to handle the Jan invoice tax.
---
### Correct Treatment:
#### 1. **Issue a Credit Note for the Cancelled Invoice**
* You should **issue a credit note** for the **original August invoice** value including the service tax amount.
* This credit note effectively cancels the service tax liability shown earlier.
#### 2. **Adjustment in Service Tax Return**
* In your next **service tax return (ST-3) for Oct 2013 - Mar 2014**, disclose the **credit note value** under the **“Other Deductions”** section.
* This will reduce your overall service tax liability and adjust for the excess tax paid earlier.
* This means the tax paid for the canceled invoice gets adjusted through the credit note in the next return.
#### 3. **New Invoice Service Tax**
* The service tax paid on the **January invoice** should be declared in the ST-3 return for the period in which the invoice was raised (Jan 2014 - Mar 2014 quarter).
* This is your **correct liability for actual services rendered**.
#### 4. **Summary Flow**
| Step | Action | Where to Show in ST-3 |
| --------------------------------------- | --------------------------------------------- | ---------------------------------------------------------- |
| Original invoice service tax (Aug 2013) | Already paid & shown in Apr-Sept 2013 quarter | Previously declared |
| Credit Note for canceled invoice | Issue credit note for August invoice | Disclose in “Other Deductions” Oct 2013 - Mar 2014 quarter |
| Revised invoice service tax (Jan 2014) | Pay & show in Jan-Mar 2014 quarter | Show as normal liability |
---
### Important:
* Keep all documentation handy — original invoice, credit note, revised invoice.
* The credit note reduces your taxable value and service tax liability retrospectively.
* This is standard practice accepted by the department.
---
If you want, I can help you draft the credit note format or guide you step-by-step to file the adjustment in the next return. Would you like that?
---
### Scenario Recap:
* Original invoice raised in **Aug 2013**, service tax paid and shown in **Apr-Sept 2013 ST-3 return**.
* Invoice later **canceled** due to incomplete work.
* New invoice raised in **Jan 2014** for reduced value, and service tax paid again.
* You want to know how to adjust the **service tax already paid for Aug invoice** in your returns and how to handle the Jan invoice tax.
---
### Correct Treatment:
#### 1. **Issue a Credit Note for the Cancelled Invoice**
* You should **issue a credit note** for the **original August invoice** value including the service tax amount.
* This credit note effectively cancels the service tax liability shown earlier.
#### 2. **Adjustment in Service Tax Return**
* In your next **service tax return (ST-3) for Oct 2013 - Mar 2014**, disclose the **credit note value** under the **“Other Deductions”** section.
* This will reduce your overall service tax liability and adjust for the excess tax paid earlier.
* This means the tax paid for the canceled invoice gets adjusted through the credit note in the next return.
#### 3. **New Invoice Service Tax**
* The service tax paid on the **January invoice** should be declared in the ST-3 return for the period in which the invoice was raised (Jan 2014 - Mar 2014 quarter).
* This is your **correct liability for actual services rendered**.
#### 4. **Summary Flow**
| Step | Action | Where to Show in ST-3 |
| --------------------------------------- | --------------------------------------------- | ---------------------------------------------------------- |
| Original invoice service tax (Aug 2013) | Already paid & shown in Apr-Sept 2013 quarter | Previously declared |
| Credit Note for canceled invoice | Issue credit note for August invoice | Disclose in “Other Deductions” Oct 2013 - Mar 2014 quarter |
| Revised invoice service tax (Jan 2014) | Pay & show in Jan-Mar 2014 quarter | Show as normal liability |
---
### Important:
* Keep all documentation handy — original invoice, credit note, revised invoice.
* The credit note reduces your taxable value and service tax liability retrospectively.
* This is standard practice accepted by the department.
---
If you want, I can help you draft the credit note format or guide you step-by-step to file the adjustment in the next return. Would you like that?
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