Service tax refund

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Ravi

Proprietor

58 Points Joined April 2011

Dear Experts,

We are in business of industrial construction; we have received service tax (50% of actual service tax as per notification no. 30/2012 dated 20.06.12, 50% service tax to be paid by service recipient) from our client.

We have given same work (After margin of 10% only) to our subcontractor and have paid 100% service tax on his bill amount. Looking to above situation we have paid more service to our sub contractor.

Example

If our Bill amount is Rs. 100 (With Material)

As per work contract we have charged ST on 40% (ie. On Rs. 40/-)

ST ( @ 15%) Amount is Rs. 6, so we have received only Rs. 3 from client.

At the same time we have paid as under.

Sub contractor Bill amount is Rs. 90 (With Material)

As per work contract sub contractor charged ST on 40% (ie. On Rs. 36/-)

ST ( @ 15%) Amount is Rs. 5.4, so we have paid Rs. 5.4

We have received ST Rs. 3 and paid to sub contractor 5.4.

So Rs. 2.4 paid extra which is our balance at ST department.

In above situation what to do from our end?

If we closed the above firm today and surrender the ST registration to department, can we claim for refund from department? What is the procedure for refund?

Please guide.

Replies (4)

K.RAJA

Tax Consultant

217 Points Joined August 2013

Dear Ravi,

providing services by way of works contract to another contractor providing works contract services which are exempted as per Mega Exemption Notification No:25/2012-Service Tax dated 20.06.2012 serial No.29 (h) is stated below...

(h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt;

As per Section 11B of the Central Excise Act, 1944 such Refund claim needs to be filed in the prescribed form (Form R) alongwith related documents with all evidence within 1 year from the relevant date. In your case relevant period means :-

Payment of service tax by receiver of service under RCM - Date of payment of Service Tax by the receiver of Service.

The following documents may be filed alonwith the Refund application:-

(1) Form R Invoice

(2)Challan Payment of Service Tax

(3) CA Certificate ST3-(Related period)

(4) Financial Statements for the Refund period

AS per Notification No.672003-CE dated 12.09.2003 issued under Sec.11BB of Central Excise Act,1944 interest at the rate of 6% is to be paid by the department on delayed refunds.

Accoriding to my knowledge, take your action regarding your ST2 surrender after sucessful completion of Refund procedure and You must file ST3 stating that refund amount in related period of ST3.