Filing of ST-3 Return- difficulty for construction sector

[Saju Philip]

dear all

the new ST-3 return for the period July-sep 2012, make it mandatory for the assessee to furnish the 'Source documents ' with respect to the adjustments under Rule 6(3). What is asked to be shown is that the details of challans by which the said amount was actually paid. We have to show the challan no., date and amount. it is not clear whether the amount to be shown is the amount adjusted or the total amount paid by that challan. It might not be a big problem for other service providers where the invoices issued might not be large in number and no. of clients are not so huge. 

But in CONSTRUCTION INDUSTRY, it is not the case. The cancellations are very often happens. The amount adjusted under Rule 6(3) may contain cancellation of say about 100 flats and that too payments were received in 1-4 installments. That means for each client who has cancelled the flat the tax might have been paid in 2-3 challans. If there are say 100 canellations one can imagine how many entries are required. Further it requires tremendous back office work to correlate the cancellations with the challans. 

Any Solutions?.

regards

CS Saju Philip

[NANDKUMAR SAGWEKAR]

Dear CS Saju Philip

As per the information given by you above , the problem is not of how to fill up the details , as per my interpretation,

of Rule 6(3) , we can adjust the amount of service tax on amount refund to the service receiver for which service tax is already paid. This is not a issue of how to show the amount of service on amount refunded or there are no

complex working ( back office work ) is involved , only thing is much little efforts are required.

 

Thanks

 

A M SHEMBKEAR

CELL 9421187122

[Saju Philip]

Dear Mr SHEMBKEAR

I think you have not get my point. It is nothing about the interpretation of Rule 6(3). It is about the filing of Form ST3 for the Quarter 2 of 2012-13. As you have pointed out that Rule 6(3) entitles the service provider to adjust his tax liability against the services provided by him with the tax refunded by him to the client for non-provision of service/cancellation of contract.

In the Form ST3, if  you enter any amount under Rule 6(3) in Row D4/E4/S4 you have to enter the details of source documents in H2 evidencing the payment of tax you have adjusted in D4/E4/S4. Here the source document is challan by which the tax was paid. For example if one shows Rs 100000 of ST in D4; 2000 of Ed. Cess in E4 and 1000 in S4 for S&H Ed.Cess you have to show the challan number, date and amount of Challan in H2. Here comes my practical diffuculty. It never happens in the Construction of Residential complex services that the said Rs 1.06lacs paid in one challan and of one client. it arises from the cancellation of so many clients and tax might be paid over a span of say 1-2 years under so many challans. One has to find out how much amount of each and every challans paid by the company, belongs to the cancelled bookings and also find out of this how much amount was actually adjusted in the earlier returns.

Don't you think that this is a difficult job involving tedious back office work?, 

Well, for an outsider who has not prepared a return of this sector the gravity could not be apprehended.

regards

CS Saju Philip

AI Summary

Source document requirement for Rule 6(3) adjustments increases compliance and reconciliation burden on construction service providers. The ST-3 return requires service providers claiming adjustments under Rule 6(3) to record the challan number, date and amount as source documents evidencing the tax payments being adjusted against refunds for cancellations or non provision of services. In the construction sector, frequent cancellations and staged receipts across multiple challans create a substantial reconciliation burden to trace which portions of historical challans relate to refunded transactions and to ascertain amounts previously adjusted in earlier returns.