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Refund

Ranjini (Accountant) (98 Points)

21 December 2012

Hello Seniors,

Please Help Me In Dis.......

We Have Raised a Service Bill In The Month Of Oct-12 and Paid Service Tax Against That Bill. Customer have not pay Single Rupee also he Shutdown his Ofiice and ran away Can i Claim Service Tax Refund And Cancel The Bill ?

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5 Replies

CA Raviteja (Risk Management) (585 Points)
Replied 21 December 2012

you can take credit for the service tax paid in next month.. pls read following excerpt....

Adjustment of taxes

W.e.f. 1.4.2011 where service tax is paid on invoice issued or advance payment received for a ‘service to be provided’, but which the assessee has not so provided wholly or partially for any reason or where the amount is renegotiated due to deficient provision of service or any terms contained in a contract, he can take ‘credit’ of such tax subject to the condition that –

where the assessee had received the payment, the assessee should have refunded the payment or part thereof received for the services so provided; or
where the assessee has not received any payment, but had paid the service tax on issue of invoice the assessee should have issued a credit note for value of service not so provided.

The Ministry’s Circular No. 341/34/2010-TRU dated 31.3.2011 explains:

"If the amount of invoice is renegotiated due to deficient provision or in any other way changed in terms of conditions of the contract (e.g. contingent on the happening or non-happening of a future event), the tax will be payable on the revised amount provided the excess amount is either refunded or a suitable credit note is issued to the service receiver. However, concession is not available for bad debts."

Thus, as per the above Circular service tax on bad debts cannot be adjusted.

An assessee who has opted for centralized registration at one or more premises, may adjust against his subsequent period’s liability the excess service tax paid by him earlier by reason of not receiving details of payments received towards the value of taxable services at his other premises or offices. Such adjustments must be intimated to the jurisdictional superintendent within 15 days from the date of such adjustment.

An assessee can adjust excess service tax paid against his succeeding period’s [i.e. next month / quarter] liability provided the following conditions are fulfilled.

The excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification;
The excess amount allowed to be adjusted (in a month / quarter) would be a maximum of Rs. 2,00,000/-. However, where an assessee is centrally registered, he may adjust the excess amount paid on account of delayed receipt of details of payments towards value of taxable services, without any monetary limit;
The details and reasons for such adjustment shall be intimated to the jurisdictional Superintendent of Central Excise with in 15 days from the date of such adjustment.

If the service provider has paid excess tax in any month / quarter on account of non-availment of the deduction in respect of property taxes paid from commercial rentals, the assessee may adjust such excess amount paid by him against his subsequent service tax liability within one year from the date of payment of such property tax. The details of such adjustment shall be intimated to the jurisdictional Superintendent of Central Excise within 15 days from the date of such adjustment.

source: www.bcasonline.org

Ranjini (Accountant) (98 Points)
Replied 21 December 2012

Dear Raviteja

you mean to say once raised the service tax Bill & paid to Department there is no Cancellation of Bill & refund of service tax as such......

Regards

Ranjini

CA Raviteja (Risk Management) (585 Points)
Replied 22 December 2012

if you want to claim refund in cash rather than self adjusting, you have to follow procedure u/s 11B of CE Act, 1944. You have to submit a written application to Department and other documentary evidence within 1 year from date of payment of service tax.

Ranjini (Accountant) (98 Points)
Replied 24 December 2012

Hi Ravi,

Then above mentioned case i can cancell the bill and can adjust the future bill

Regards

Madhu

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 24 December 2012

As explained by Raviteja, adjustment on account of bad debt is not allowed under Rule 6(3)(b) of ST Rules 1994.

Your course of action is not advisable. If you do that you are exposing yourself to risk. Be careful while producing records to auditors with respect to statutory, tax and departmental service tax audit.

Regards,