LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Excess payment of service tax

V Devaraj Rao (Asst. Manager - Finance) (84 Points)

01 November 2013

Dear Friends,

Service Tax excess payment is refundable / can be adjusted only if this has happened due to the reason other than interpretation of law / taxability / valuation problem / applicability of exemption

Can anybody answer the following querry

What about the adjustment ?

If the excess payment happened due to interpretation of law / taxability / valuation problem / applicability of exemption

Thanks in advance

V Devaraj Rao

Reply
Follow
Share

10 Replies

Rahul Singhania (Sr. Executive) (167 Points)
Replied 01 November 2013

I would like to express my views as under

If one is a continous service provider, refund route would not be advisable as scope of utilisation exists.

Many a time person liable for payments of service tax, due to oversight ends up paying excess amount over and above what is required to be paid. In such cases the law provides for two alternatives for rectification of such an error.

(i) The person may adjust such excess payments against his future Service Tax liability (Self Adjustment) or

(ii) The person may claim refund of Service Tax paid

According to Rule 6(4A), Service Tax Rules, 1994 where a person has paid any amount in excess of the amount required to be paid towards Service Tax liability for a month or quarter, he may adjust such excess amount paid by him against his Service Tax liability for the succeeding month or quarter. The adjustment is limited to the liability of Service Tax in the subsequent month or quarter

Further such self-adjustment is subject to conditions as per Rule 6(4B)
Self-adjustment is permissible if
(i) Excess Service Tax paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification
(ii) Excess Service Tax amount paid by an assessee having Centralised Registration on account of delayed receipt of details of payments towards Taxable services may be adjusted without monetary limit.
(iii) For assessee other than Centrally registered, specified in (ii) above, the excess amount of Service Tax paid may be adjusted with a monetary limit of Rs. 2,00,000/- (Two lakh) for a relevant month or quarter.
(iv) The details and reasons for such adjustment shall be intimated to the jurisdictional Superintendent of Central Excise within a period of 15(fifteen) days from the date of such adjustment.

For all purposes intimation is a must which should not be ignored, inspite of having ample facts and justifications of excess payment.

V Devaraj Rao (Asst. Manager - Finance) (84 Points)
Replied 02 November 2013

Dear Rahul Sir,

It seems the Rules 6 (4A) & (4B) got ammended

I HAVE REFERRED THE IPCC PAPER - 4 TAXATION LATEST STUDY MATERIAL PAGE NO. 4.13

(CHAPTER 4 OF SERVICE TAX & VAT)

As detailed by you all the self adjustment conditions got removed and only one condition is there

i.e., refund can be claimed for the reasons other than

INTERPRETATION LAW / TAXABILITY / VALUATION / APPLICABLITY OF EXEMPTION NOTIFICATION / CLASSIFICATION

My querry was on whether the excess paid tax due to the above reason will get forfieted

Your reply will benefit me a lot

Thanks in advance

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 02 November 2013

CA Rahul Ji, I agree with you, except that at point (iii) you mentioned about the monetary limit of Rs. 2 Lacs and at point (iv) you mentioned about intimation to the department. Intimation is necessary in case of Advance payment under Rule 6(1A). Kindly correct me, if i am wrong.

Sidharth (Article Assistant) (80 Points)
Replied 02 November 2013

Agree with Mr. Manoj agarwal.

If u have paid excess service tax than u can adjust it against future laibilities under Rule 6(4A) of Service Tax rules, 1994.

Rule 6(1A) of Service Tax rules, 1994 applies in case of advance payment of service tax and intimation is required to be given to the department in case of such advance payment.

Rahul Singhania (Sr. Executive) (167 Points)
Replied 02 November 2013

Rao Sahab,

In the above situations as asked by you, when Service Tax is paid in excess such as when the same is due to a reason involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification. In such case the excess paid amount cannot be adjusted by the assessee who shall be required to obtain a refund of the excess paid amount.

Also Refund of Service Tax paid is dealt with as per the provisions of Section 11B of the Central Excise Act, 1944, which is applicable to Service Tax vide Section 83 of the Finance Act 1994. However, the refund is due only if it is proved that the claimant of refund has already refunded such amount to the person from whom it was received or had not at all collected the amount.

Rahul Singhania (Sr. Executive) (167 Points)
Replied 02 November 2013

Agarwal Sahab,

Initially there was a restriction on Monetary limits also but by virtue of the notification no. 03/2012 dated 7/03/2012 the Monetary limits has been abolished by the finance act but Time limits for adjustment of excess service tax payment is still a issue before us.

Also I agree that intimation is necessary in case of Advance payment under Rule 6(1A).

Further, assesses having centralised registration who paid excess amount of Service Tax, on account of non-receipt of details regarding the receipt of gross amount for the services at his other premises or offices, may adjust such excess amount against the Service Tax liability for the subsequent period and furnish the details of such adjustment to the Jurisdictional Superintendent of Central Excise/ Service Tax within 15 days from the date of such adjustment (Rule 6(4A) of the STR, 1994).

Correct me if I am still wrong-

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 04 November 2013

Rahul Ji,

The condition regarding intimation in case of centralised registration has also got amended vide N/N-3/2012 dated 17-03-2012 w.e.f. 01-4-12.

Kindly see new Rule 6(4B) of STR. There is no condition for intimation of adjustment under Rule 6(4A) to the authorities.

K.Raghu Natha Reddy. (Accountant ) (21 Points)
Replied 03 August 2015

Dear Sir

1.7.15 we have service amount received in advance rs.1,00,00,000/- service tax payable @ 14% rs.14,00,000/-

25.7.15 raised tax invoice against advance amount rs.95,00,000/- service tax @ 14% rs.13.30.000/-

Input service tax avaiable rs.15,54,000/-

please telme the service tax payable amount

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 03 August 2015

No tax is payable after utilization of input service.

Yogesh Mankar (Proprietor) (45 Points)
Replied 24 September 2015

Thank you for the details. In case of adjustment made in the susequent quarter for any excess payments (due to not providing the service as billed in the last qtr), has the "intimation" mentioned above be as a physical letter submission of can it be done on their web site / email ?

Warm regards. Thanking you before hand