Wrong payment of Service Tax
This query is : Resolved
10 July 2009
While making a e-payment for Interest for Mr A, we had mistakenly entered ST regn of Mr B and processed the payment.
Pl. advise:-
1. if this payment can be adjusted to the
credit of Mr A.
2. if the payment can be adjusted with
regular ST liability in future (not
interest).
Pl. advise:-
1. if this payment can be adjusted to the
credit of Mr A.
2. if the payment can be adjusted with
regular ST liability in future (not
interest).
12 July 2009
A will not be eligible for the credit of the same. However B can apply for refund or utilise for his future payments
02 August 2009
Dear Mr Madhukar,
Thank you for your reply. However, pl clarify since the payment was made on account of Interest, can the same be utilised for future payment towards regular service tax liability. Also quote relevant section, circular, case law if any.
Thank you for your reply. However, pl clarify since the payment was made on account of Interest, can the same be utilised for future payment towards regular service tax liability. Also quote relevant section, circular, case law if any.
03 August 2025
Regarding your question on wrong payment of Service Tax (ST) made on account of Interest for Mr. A but entered using Mr. B's ST registration number, here is the clarification:
1. Can the payment be adjusted to the credit of Mr. A?
No, Mr. A cannot claim credit for the payment made against Mr. B's Service Tax Registration Number (STN). The tax credit is linked strictly to the STN used for payment. Since the payment was made using Mr. B's STN, only Mr. B can claim credit for it.
2. Can the payment (made for Interest) be adjusted against future regular Service Tax liability?
Yes, Mr. B (whose STN was used) can:
Apply the amount paid (even if it was for Interest) towards future regular Service Tax liability under his registration.
Alternatively, Mr. B can file for a refund of the wrongly paid amount if it is not to be adjusted.
Relevant Legal Provisions & Circulars:
Service Tax Rules, 1994: Payments made are credited against the Service Tax Registration number through which payment is made.
The credit or utilization of payment is linked to the PAN and Service Tax Registration Number mentioned in the challan.
Payments against interest cannot be adjusted against principal tax liability for another person or entity.
Refunds for such incorrect payments can be applied under Rule 5 of the CENVAT Credit Rules, 2004 or relevant provisions in Service Tax rules applicable at the time.
Suggested course of action:
Mr. B should file for refund of the amount paid mistakenly on behalf of Mr. A or adjust it against his own future liabilities.
Mr. A should make the correct payment under his own ST registration.
1. Can the payment be adjusted to the credit of Mr. A?
No, Mr. A cannot claim credit for the payment made against Mr. B's Service Tax Registration Number (STN). The tax credit is linked strictly to the STN used for payment. Since the payment was made using Mr. B's STN, only Mr. B can claim credit for it.
2. Can the payment (made for Interest) be adjusted against future regular Service Tax liability?
Yes, Mr. B (whose STN was used) can:
Apply the amount paid (even if it was for Interest) towards future regular Service Tax liability under his registration.
Alternatively, Mr. B can file for a refund of the wrongly paid amount if it is not to be adjusted.
Relevant Legal Provisions & Circulars:
Service Tax Rules, 1994: Payments made are credited against the Service Tax Registration number through which payment is made.
The credit or utilization of payment is linked to the PAN and Service Tax Registration Number mentioned in the challan.
Payments against interest cannot be adjusted against principal tax liability for another person or entity.
Refunds for such incorrect payments can be applied under Rule 5 of the CENVAT Credit Rules, 2004 or relevant provisions in Service Tax rules applicable at the time.
Suggested course of action:
Mr. B should file for refund of the amount paid mistakenly on behalf of Mr. A or adjust it against his own future liabilities.
Mr. A should make the correct payment under his own ST registration.
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