Servic tax query

Dear Sir,

 
Please guide me regarding the query. We will receive payment from the service receiver for the invoice raised by us say for e.g.  Rs 10,000 including service tax i.e; Rs 8,900 for Service and Rs 1,100/- as Service tax. Now if customer not satisfied with our service upto 3 month then we are offering 100 % refund which means we have to return Rs.10,000/- to Service receiver.
 
But by doing so, we will face loss of Rs. 1,100/- (Service Tax) which is already paid. How can we save ourself from the Loss. Can it be adjusted as modvat against the new invoice or not
 
Please suggest if anything possible
Replies (1)

Service Tax need not to pay against received bill.  It is required to be paid against payment. So, whenever payment is made to party, then only you pay service tax. If your payment is made within three months and paying service tax on that, in turn you can avail Cenvat credit which can be used for payment on sales effected. But you are not allowed to adust for next payment.

Regards,

JMS

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