service tax obligation

This is a contractual issue and if the indemnity of taxes and interest was agreed then liability may exist. Otherwsie in normal circumstances only the ST actually paid in arrears [ this can also be verified] should be recovered.

As per my view,  Yes, Service provider can recover both service tax and interest if service receiver is ready to pay. As the ultimate payment of service tax is done by service receiver, Service provider only collects service tax from service receiver and pay it to the government..

Thanks for replying Madhukar sir.

Also they are charging all amount of service tax and interest in the current year .Is that fair as per accounting standards.

In my opinion, only current year's amount should be charged . and previous year amount should be charged as prior period item.