Service tax impact on credit note for penalty amount hold by customer

Service Tax (Legacy) 335 views 2 replies

Dear Colleagues,

I have query related to service tax . A service provider has raised an invoice for providing services and also giving an assurance for maintaining the quality of material. He raised an invoice for services say Rs. 2 cr + service tax. Now service recipient has raised a claim of Rs 10 lac for quality deterioration. Now please suggest us whether service tax is applicable on Rs. 10 lac credit note on not ? If yes is there any case law ?

Regards

Rakesh Mittal

09643356753

Replies (2)

No service tax will be applicable on it but service receiver will have to reverse the cenvat credit taken by him on those 10 lacs.

It means no one will be able to get service tax benefit on penalty amount

neither service provider by reversal of service tax via credit note.

nor service recepient by cenvat credit on original invoice

Rgds 


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