Service tax for the prior period transactions

Our service provider raises the debit note for service tax amount for the prior period transactions (for past 4 years). The service tax amount comes around 7 Lakhs they did not collect the service tax for said period now they raise the debit note to us current date.

My Question is :-

  1. May we pay the above said amount to our service provider?
  2. If we pay the service tax amount to our service provider can we take the Cenvat Credit for current year?
  3. If we pay this, we have to deduct the TDS for service tax amount?

 Kindly help to us for above

Replies (1)

1. Your liability to pay service tax for past period is based on the terms of contract with the service provider. If the terms provide that all taxes will be over and above the agreed rate, then you have liability.

2. Cenvat credit can be taken if it qualifies as inputservice as per defnition. But department may challenge 1) debit note as improper document 2.) Credit attributable to extended period of limitation.

3. TDS is deductible.

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