Excess Amount Paid under RCM

[Asked by Guest]

A company had paid its RCM liability under works contract on the basis of Advance Payment made to the contractor and the same have been shown under ST3. Actual work done and invoice received subsequently were less than the amount paid to the contractor.

What all needs to be done in this case, for the extra amount discharged under RCM to the government ?

[Ganeshan Kalyani]

Sir, either you can adjust the excess paid service tax against future service tax liability or claim refund from the department. Thanks.

Do we need to inform the department of the same. Service Receiver can claim the refund of the excess amount paid or only the Service Provider, if yes under which provision.

[KASTURI SETHI]

Dear Sh.Jhawar,

You must read Rule 6 (4A) and (4B) of Service Tax Rules, 1994. Pl. note word, "an assessee" and your are an assessee under RCM Scheme. Any person who is liable to pay tax is an assessee. Rule (4B) says that excess amount paid should not be on account of interpretation of law, taxability, valuation or applicability of any exemption notification.

[KASTURI SETHI]

No need to inform the department. You will inform the department by way of ST-3 return only.The condition of intimation which was earlier in force, has been dispensed with. I concur with the reply of Sh.Ganeshan Kalyani, Sir.

[Suryanarayana Sathineni]

Dear Friend,

As already clarified by Mr. Ganesh kalyan Ji and Kasturi Sethi Ji, you can adjust such excess payment for the future ST liability and in other words such adjustment can be shown in the ST-3. As an abundant caution,(though it it not required to be intimated) Pl submit a letter to the department about the excess payment adn your proposal to adjust the same for future liability.

Best Regards

Suryanarayana

AI Summary

Excess RCM payment remedy: adjust against future liability or claim refund, recorded in ST-3 return.
Excess payments under the Reverse Charge Mechanism may be adjusted against future service tax liability or claimed as a refund, and such adjustment is to be shown in the ST-3 return; separate departmental intimation is not required. Rule 6(4A) and 6(4B) of the Service Tax Rules, 1994 govern eligibility, the term assessee includes the RCM payer, and payments attributable to disputes over interpretation, taxability, valuation or exemption applicability are excluded from relief under Rule 6(4B).