Service tax payment
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 January 2014
Dear Sirs,
VCES 2013 stipulates that a minimum 50% of service tax liability to be paid on or before 31st December,2013. Service tax liability means overall liability or individual services liability?
Please confirm.
Regards,
A S Rao
VCES 2013 stipulates that a minimum 50% of service tax liability to be paid on or before 31st December,2013. Service tax liability means overall liability or individual services liability?
Please confirm.
Regards,
A S Rao
02 January 2014
overall service tax liability not a indivisual service liabitliy if you provide more then one services the you have to pay 50 % of total service tax
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 January 2014
Thanks for info.
We have filed return under VCES covering two services one is constuction and the other is consultancy. for construction the liability is Rs,10lacs and for consultancy the liability is Rs.5lacs. on 31 st Dec,2013 we paid Rs.8lacs. But while making online payment we erroneously mentioned Rs.5 Lacs for consultancy and Rs.3 Lacs for construction while arriving at the payment of service tax.i.e service tax codes were wrongly mentioned. we paid 50% of over all liability but category wise we have not paid for construction services which is Rs.5 lacs but due to wrong code the amount paid was only Rs.3 lacs. Any possible objection by dept?
We have filed return under VCES covering two services one is constuction and the other is consultancy. for construction the liability is Rs,10lacs and for consultancy the liability is Rs.5lacs. on 31 st Dec,2013 we paid Rs.8lacs. But while making online payment we erroneously mentioned Rs.5 Lacs for consultancy and Rs.3 Lacs for construction while arriving at the payment of service tax.i.e service tax codes were wrongly mentioned. we paid 50% of over all liability but category wise we have not paid for construction services which is Rs.5 lacs but due to wrong code the amount paid was only Rs.3 lacs. Any possible objection by dept?
24 July 2025
Yes, the **Service Tax Department** may raise an **objection** in this scenario, based on the incorrect **categorization (service tax codes)** of the payment. Here's a breakdown of the key issues and possible departmental concerns:
---
### **Situation Summary:**
| Component | Actual Liability | Paid | Paid Under Code |
| ------------------- | ---------------- | ------- | --------------- |
| Construction | ₹10 lacs | ₹3 lacs | Consultancy |
| Consultancy | ₹5 lacs | ₹5 lacs | Construction |
| **Total Liability** | ₹15 lacs | ₹8 lacs | |
* Total payment made: ₹8 lacs (Correct overall amount-wise at \~53.33%)
* Misclassification: Paid ₹5 lacs under **consultancy** (actual liability: ₹5 lacs), but ₹2 lacs of this actually belonged to **construction**.
---
### **Possible Objections by Department:**
1. **Incorrect Tax Code:**
* Payments made under the **wrong service category** may not automatically get **credited against the correct liability**.
* The department typically matches tax payments **against service codes**; hence, it may reflect **short-payment** for **construction service**.
2. **Partial/Non-Payment for Construction Services:**
* As per records, only ₹3 lacs appears to have been paid for construction (actual liability: ₹10 lacs).
* The department may raise a demand for the **shortfall of ₹7 lacs** for construction services.
3. **Interest and Penalty:**
* The department may impose **interest and penalty** for:
* **Delayed/short payment** under the appropriate service code.
* **Incorrect categorization** could be treated as a compliance lapse.
---
### **What You Can Do:**
1. **File a Clarification or Representation:**
* Submit a **letter to the department** explaining the mistake in code selection.
* Attach challans and working papers showing that **the total amount paid** was correct (or proportionally correct), just misallocated.
2. **Maintain Proof of Payment:**
* Retain all challans, bank payment receipts, and internal records showing the **intention** and **breakdown of liability**.
3. **Apply for Rectification:**
* In some cases, the **ACES portal** (legacy service tax portal) or the department allows for **correction of challan details**.
* If rectification is accepted, the payment may be reclassified under the correct service head.
4. **Pay Shortfall (if demanded):**
* If the department insists, you may have to **pay the shortfall** under the correct code and then seek **adjustment/refund** for the excess in consultancy.
---
### **Conclusion:**
Yes, there is a strong possibility that the department may raise an objection due to the mismatch in service tax codes. However, if you **proactively clarify** the error and provide full documentation, you may be able to avoid penalties or resolve the issue with minimal consequences.
Would you like a sample **letter format** to the department explaining this error?
---
### **Situation Summary:**
| Component | Actual Liability | Paid | Paid Under Code |
| ------------------- | ---------------- | ------- | --------------- |
| Construction | ₹10 lacs | ₹3 lacs | Consultancy |
| Consultancy | ₹5 lacs | ₹5 lacs | Construction |
| **Total Liability** | ₹15 lacs | ₹8 lacs | |
* Total payment made: ₹8 lacs (Correct overall amount-wise at \~53.33%)
* Misclassification: Paid ₹5 lacs under **consultancy** (actual liability: ₹5 lacs), but ₹2 lacs of this actually belonged to **construction**.
---
### **Possible Objections by Department:**
1. **Incorrect Tax Code:**
* Payments made under the **wrong service category** may not automatically get **credited against the correct liability**.
* The department typically matches tax payments **against service codes**; hence, it may reflect **short-payment** for **construction service**.
2. **Partial/Non-Payment for Construction Services:**
* As per records, only ₹3 lacs appears to have been paid for construction (actual liability: ₹10 lacs).
* The department may raise a demand for the **shortfall of ₹7 lacs** for construction services.
3. **Interest and Penalty:**
* The department may impose **interest and penalty** for:
* **Delayed/short payment** under the appropriate service code.
* **Incorrect categorization** could be treated as a compliance lapse.
---
### **What You Can Do:**
1. **File a Clarification or Representation:**
* Submit a **letter to the department** explaining the mistake in code selection.
* Attach challans and working papers showing that **the total amount paid** was correct (or proportionally correct), just misallocated.
2. **Maintain Proof of Payment:**
* Retain all challans, bank payment receipts, and internal records showing the **intention** and **breakdown of liability**.
3. **Apply for Rectification:**
* In some cases, the **ACES portal** (legacy service tax portal) or the department allows for **correction of challan details**.
* If rectification is accepted, the payment may be reclassified under the correct service head.
4. **Pay Shortfall (if demanded):**
* If the department insists, you may have to **pay the shortfall** under the correct code and then seek **adjustment/refund** for the excess in consultancy.
---
### **Conclusion:**
Yes, there is a strong possibility that the department may raise an objection due to the mismatch in service tax codes. However, if you **proactively clarify** the error and provide full documentation, you may be able to avoid penalties or resolve the issue with minimal consequences.
Would you like a sample **letter format** to the department explaining this error?
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