Non receipt of payment of Service Invoice

[deepak kalambate]

Dear Sir,

We have raised Invoice for service provided and service tax is Charged in the Invoice

Accordingly we have paid Service Tax to Govt.

We have not received payment from the service receiver and hence we have decided to write off these invoices.

As Service Tax is already paid by us, can we get setoff of service tax paid.

Above transaction are for the year 2013-2014

Please advice.

Deepak

[Rajagopalan Ranganathan]

Sir,

There is no provision under Finance Act, 1994/Cenvat credit rules, 2004 to get set off of service tax paid in respect of invoices for which payment was not received by service provider.

[YAGAY and SUN]

Dear Deepak,

It would be better for your to write to jurisdictional Commissioner/CBEC with all material facts by mentioning the reasons for not getting payment, accounting treatment given to such transaction (Bad Debts) etc that what are the remedial actions are available to the Service Provider in case payment is not received for some or other reasons. Also check whether provision of limitation under Section 11B of C.E. Act as made applicable to service tax vide Section 83 in this matter for claiming of Refund.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

[Manoj Agarwal]

Dear Sir,

Depending on other facts of your case, you may take the benefit of Rule 6(3) of STR, 1994 which provide for credit of excess service tax paid by an assessee by issuing credit note for renegotiated value of service due to deficient provision of service or any terms contained in the contract.

Since your transaction relates to 2013-14, the time limit for filing refund claim, if any, u/s 11B of CEA, 1944 has expired, so your only remedy is Rule 6(3) subject to conditions.

Regards,

Manoj Agarwal, Service Tax Consultant

+91-9937041788

AI Summary

Nonreceipt of payment and service tax: refund barred by limitation; credit note under Rule 6(3) may provide relief.
No statutory provision allows setoff of service tax paid on invoices for which payment was not received; taxpayers should consult authorities regarding remedial options and limitation consequences. Where allowable, adjustment by issuance of a credit note under Rule 6(3) of the Service Tax Rules, 1994 may correct excess tax paid following renegotiation or deficient service, but its availability is subject to the rule's conditions and any expired refund limitation.