excess income shown in the return during the year 2014-15

[Jayadevan K M Nair]

During the year 2014-15 Works contract advance receipt and bills both shown in the return and paid ST thereon. But party paid the payment after adjusted the advance. The mistake found only at the time of audit. I want to know that can it adjust 2015-16 first half return ?

[Rajagopalan Ranganathan]

Sir,

As per rule 6 (4A) of Service Tax rules, 1994,"notwithstanding anything contained in sub-rule (4), where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be.

But rule 6 (4B) stipulates that the adjustment of excess amount paid, under sub-rule (4A), shall be subject to the condition that the excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification.

AI Summary

Adjustment of excess service tax payments allowed against the succeeding period, subject to limited conditions preventing legal-dispute adjustments. A taxpayer paid service tax on both advance receipts and bills for a works contract, later discovered on audit when the advance was adjusted. Excess service tax payments may be adjusted against the succeeding period's liability, but only where the excess arises for reasons not involving interpretation of law, taxability, classification, valuation or the applicability of any exemption notification.