Service tax refund on bank guarantee

Dear Sir,

We have availed bank guarantee worth Rs.2 crores and paid Bank commission @ 2% which comes toRs.20 lakhs + service tax of Rs.40,000/-. so total paid Rs.20 laksh 40 thousand..

We requested to reduce commission 0.5% ,After 6 months, bank approved commission rate to 1.5% and refunded Rs.5 Lakhs. but did not refund service tax on refunded amount.

Question: Whether can bank should refund service tax when refunded principal amount.?

Please answer.

Replies (3)

I think bank cannot refund, because, after collecting ST, that portion will go to ST payable. Afterthan ST remittence will be done by regional/Zonal office of that bank. So bank cannot reverse the amount which is collected from you...

but you can take input tax credit for the same.

Dear Sir,

In this regard bank given you a credit not or statement for reason reduce the comm. and same service tax matter. If bank not same clarify that differential amount to be adjusted with further payment of service tax and excise but with bank approval i.e. statement or credit not you cannot adjust the same, otherwise facing the SCN in this regard. Hope you got same if not plz forward the same. 

Agreed with Gangatharam, as service tax collected in excess cannot be refund back on the ground that commission expenses were reduced.

once amount collected will be deposited in government treasury and you can claim input tax credit or that amount will be set off against any service tax payment liability.

Thanking you

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