Adjustment of excess paid service tax.

[Sanjeev Chauhan]

Respected All,

Kindly guide,

Suppose, a builder booked several flats in 2011-12 and received partial amount as advance from customers and also paid service tax on the same in 2011-12 (he did not collect service tax from their customers). 

In 2012-13, booking of 3 flats got cancelled and the builder return the advance received from customers (did not return s.t., as he did not collect it).

Now, the query is that , can he take the credit of the s.t. paid on the advance of cancelled flats in 2012-13 under Rule 6(3) of Service Tax Rules.

As per said Rule 6(3), service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received.

Is subsequent period u/r 6(3) will be the very next month/ quarter or otherwise? In the instant case, what is the subsequent period:

1. Subsequent to the date of excess payment of s.t ? ;

or

2. Subsequent to the cancellation of flats ?

 Ultimately, whether the builder is eligible to take the credit of the above said excess paid service tax or not?

Regards.

AI Summary

Builder Seeks Credit for Excess Service Tax Paid on Canceled Flat Bookings Under Rule 6(3); Amendments Permit Cenvat Credit Carryover. A builder collected advance payments for flat bookings in 2011-12 and paid service tax without collecting it from customers. In 2012-13, three bookings were canceled, and the builder refunded the advance but not the service tax. The query is whether the builder can claim credit for the excess service tax paid under Rule 6(3) of the Service Tax Rules. Responses indicate that the subsequent period for claiming credit starts after the refund of the advance, and amendments allow the excess amount to convert into Cenvat Credit, which can be carried forward indefinitely.