Service Tax Advance payment & Input on Bed debts written off
kamal Jangid
(Querist) 10 October 2009
This query is : Resolved
Dear Sir,
One of our clients paying Service tax on billing basis i.e. he paid whatever he service tax charged on previous month billing irrespective of receipts of bills payment..
(He is paying service tax on monthly billing i.e. at the end of month he calculate service tax on previous months billing and same depositing to Department.)
When i audited clients accounts i faced some problem:-
1. Payment of Service tax:-
As per service tax Act, there is no Specific Rule/Section that service tax can be paid on Billing. As per Act it will considered Advance Payment of Service tax as per Rule 6 of service tax Rule, 1994. If we paid Advance service tax we are required to give details of Advance payment and adjustment in Return of Service tax as per section 70.
Details of such adjustment and reason their of should be intimated to Jurisdictional Range Superintendent with in 15 days.
However Clients had not taken any apporval and no adjustment shown in his return.
2. When he write of any debtors bill he also write back service tax amount charged on bill at the time of billing irrespective period of bill.(Although he had been paid service tax at the time of Billing on the same bill but now he is taking credit at the time of write back of bill)
3. He is taking 100% Cenvat credit on input service received by him on Payment of service.
Please suggest on the above all three matter . Is it can be carried over or not in future (as per clients in this field every service provider following this practice)
Thanks & Regards
Kamal
tarun goyal
(Expert) 11 October 2009
please clarify, whether your client is paying service tax out of the credit or in cash.
Chirayu Kothi
(Expert) 12 October 2009
Q-1 The Service Tax be paid when serivce completed or provided by service provider,now your client paying while raising the bill means he s paying Advance Service tax which can be Adjust in the Next Month / Quarter as applicable. The intimation is not as important in case but you need to fight against department for that.
Q-2 As the case of Bad Debt or W/O he cant take credit of paid service tax. The refund claim will be a good procedure for the Advance Paid Service Tax.
Q-3 So there is as such no problem as he is taking 100% CENVAT on Input Services but make sure he has paid the amount.
Now, In Advance Payment or Excess Payment of service Tax issue is in favor of Revenue because if u pay the Excess or Advance Excise Duty that duty shows in the PLA / Account Current.
The same case in Service Tax if an Assessee has paid the Excess or Advance that why should not he can Adjust the whole amount within the Financial Year. (No PLA Rule under Service Tax Rules)
(This is general solution as u have not mentioned the duty paid in Cash or Cenvat)
kamal Jangid
(Querist) 12 October 2009
Clients paying the amouint in cash after adjustment of CENVAT Amount (CENVAT is only 2-3% of total Service tax)
Regards
Kamal
