Adjustment u/r 6(3)

Queries 876 views 3 replies

CS SAJU PHILIP MANALEL

Company Secretary in Practise

157 Points Joined December 2010

This query is regarding the adjustment under rule 6(3) and representation thereof in form ST-3

1- Mr. A booked a Flat during June-2011 and he had paid Rs. 2,00,000/- towards booking amount. We had raised bill in June-2011 on receipt basis and billed the full value with Basic amount i.e. Rs. 194979/- & Service Tax Rs. 5021/-(2.575% of Basic).

Tax amount Rs. 5021/- paid in 05-Jul-2011 against Service tax liability of Jun-2011. The Challan number was XXXXX dated 05-Jul-2011.

Mr. A cancelled his flats in November 2011 and we had taken adjustments under Rule 6(3)

2- A New Customer Mr. B booked a Flat during Nov-2011. He Paid Rs. 150000/- as booking amount in Nov-2011. Demand raised in Nov-2011 on receipt basis as follows

Basic amount is Rs. 146234/- & Service Tax Rs. 3766/-(2.575% of Basic).

Therefore, service tax Liability for Nov-2011 (Payable on Dec-2011) was Rs. 3766/-.

But service tax was not paid in Dec-2011 (against Nov-2011 Liability). And adjusted under rule 6(3).

Rs. 3766/- (Mr. B) adjusted in Nov-2011 against cancellationof Rs. 5021/- (Mr. A)& balance 1255/- will be adjustable for next month.

Now, The booking of Mr. B is also cancelled in Oct-2012 one year after the booking.

3- A third Customer Mr. C booked a new flat in Oct-2012. He paid Rs. 150000/- as booking amount in Oct-2012.Demand raised in Oct-2012 as per agreement detailed below

Basic amount is Rs. 146234/- & Service Tax Rs. 3766/-(2.575% of Basic).

The service tax liability for Oct-2012 (Payable on Nov-2012) was Rs. 3766/-

But service tax was not paid in Nov-2012 (against Oct-2012 Liability). Andreadjusted under rule 6(3).

Rs. 3766/- (Mr. C) adjusted in Oct-2012 against cancellation of Rs. 3766/- (Mr. B).

Query-

In Oct-2012 Service tax payable Rs. 3766/- against booking of Mr. C. Which was adjusted against booking cancellation of Mr. B in Oct-2012. But we didn’t pay any amount against Mr. B Booking in Nov-2011. And it was readjusted against booking cancellation of Mr. A in Nov-2011.Booking date was Jun-2011 for Mr. A. Payment of Rs. 5021/- done in 05-Jul-2011 against Mr. A booking & Challan number was XXXXX.

Against Oct-2012 cancellation of Mr. C, We have to submit challan number with payment date in Service tax Return. Can we use Challan number XXXXX dated 05-Jul-2011 against Oct-2012 cancellation? This may result over adjustments against the same challan.

If we make sum of adjustment made for the challan no XXXXX, it will greater the Challan amount i.e. Rs 5021/-

Please repond

Replies (3)

Sidharth

Article Assistant

80 Points Joined September 2011

The Solution according to me is as follows :

Experts please do correct me if i am wrong !

First of all the rate of service tax has been changed to 12.36(12+2%+1%) w.e.f 01.04.2012. Accordingly the service tax liability for the month of Oct-12 would be = 1,46,234*3.09% which comes to Rs. 4,519.

Now, for the month of Nov-11 you have correctly adjusted the liability under rule 6(3) of Service tax rules, 1994. The balance of Rs. 1,255 needs to be adjusted against further liabilities.

For the month of Oc-12, the liability comes to Rs. 4,519. This liability should be disposed off by adjusting the amount of Rs. 1,255 under Rule 6(3) and the balance needs to be paid in cash.

You cannot adjust amount of Rs. 3,766 as you have not paid the amount in cash to the government.

So the balance that needs to be paid in cash is Rs. 3,264.

Thank you !

Experts please provide your feedback if i am wrong.

CS SAJU PHILIP MANALEL

Company Secretary in Practise

157 Points Joined December 2010

Thanks for the reply

But please note that eventhough i have received 3 bookings and Total of Rs 5.00 lacs including service tax during these period, i had not provided any service on these bookings and paid back the entire amount with tax to the clients. now my question is what about the tax which i paid to Govt, which i paid back to the client.

I have not earned a single penny and has not retained any tax with me. Since even the tax retained my me against Nov. 2011 booking by taking adjustment u/r 6(3) has been paid back to the client. Upon refund, should the credit taken u/r 6(3) not be reversed, and again used against Oct 12 cancellation.

rgards

Sidharth

Article Assistant

80 Points Joined September 2011

Yes sir, I was wrong the liability of oct 12 ie. Rs 4519 can be adjusted u/r 6(3) and balance Rs 502 (1255+3766-4519) can b adjusted agst further liabilities... You can give source document of challan paid in jul 11. It wont cause any issues!