Filling ST3 amedment

[sandeep singh]

Dear Sir

We run a franchise of International company and while providing service whatever amount is collected 20% of that amount ( and ST on 20%) is returned to the company. we pay service tax on 80% and company on 20%. We are filing Service Tax on our own from last two years and we are paying ST on only 80%.While filing ST3 we mentioned collection figure of only 80% for each month. We did not filed on 100% of collection and took cenvat credit on 20% ( Pls note company paid taxes on 20% and provided us Invoice for that). Do we need to file ST3 amendment, if so how to do it?

Thanks for help.

[S G]

Dear Mr. Sandeep,

As per provision of service tax every service provider is required to pay service tax on the whole amount which he received from the service receiver. Accordingly, in your case you should pay the service tax on 100% of amount received. Further, the correct method to do the transaction was that you had to pay the service tax on 100% and take the CENVAT credit on the basis of invoice raised by the franchiser.

It is worthy to mention here that as per fifth proviso to Rule 4(7) the provider of output service shall not take CENVAT credit after one year of the date of issue of any of the documents specified in sub-rule (1) of rule 9.

Also, the time limit to revise the return is 90 days from the date of filing or due date of filing, as applicable.

In your case, my opinion is that you should pay service tax on balance 20% along with interest after adjusting CENVAT credit available to you as per Rule 4(7) of the CENVAT Credit Rule.

Further, you must document the calculation of differential service tax payable and paid to prove before the service tax department as and when required.

Thanks!!

AI Summary

Service tax liability on full consideration: franchisees must account for tax on entire receipts and adjust CENVAT accordingly. The franchisee must account for service tax on 100% of receipts and may take CENVAT credit only on invoiced amounts from the franchiser, subject to the timeliness restriction on credit. Returns may be revised only within the statutory revision window. The franchisee should compute and pay the differential tax on the withheld portion, adjust admissible CENVAT credit per the CENVAT rules and time limits, pay applicable interest, and maintain records evidencing the calculations and adjustments.