Excess Payment of Service Tax Adjustment

[Ganeshan Kalyani]

Dear Experts,

I would like to discuss on the provision of Section 6 (3) of Service Tax Rules With regard to below transaction.

An assessee has paid service tax in the month of September 2015 for say ₹ 10,000/-. Later in the month of November, the terms got re-negotiated to lesser value and as a result the service tax payable revised to ₹ 9000/-. The assesse adjusted the excess payment of ₹ 1000/- against the liability of November.

In this scenario the assesse may as per the provision cited below may show this adjustment in the second half yearly return.

The rule is reproduced as below:

Rule 6(3) of ST Rules states that ‘Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract, the assessee may take the credit of such excess service tax paid by him, if the assessee, -

(a) Has refunded the payment or part thereof, so received for the service provided to the person from whom it was received; or

(b) Has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued.

If availed the benefit of this provision then assesse can refrain from filing an intimation letter to the Department about such excess payment. As the provision applies when the service tax had been paid on advance. Here it is not advance but an excess payment.

Request to discuss on the issue to enrich my knowledge. Thanks.

AI Summary

Discussion on Rule 6(3) Adjustment for Excess Service Tax Payments and Procedural Clarifications in ST-3 Returns (3) An individual initiated a discussion about the adjustment of excess service tax payments under Rule 6(3) of the Service Tax Rules. The scenario involved an assessee who initially paid 10,000 in service tax, later renegotiated the terms to a reduced tax liability of 9,000, and adjusted the excess 1,000 in a subsequent return. The rule allows such adjustments without notifying the department, as the ST-3 return serves as sufficient intimation. Participants clarified the differences between Rule 6(3) and other related rules, emphasizing the procedural changes since manual filings. The discussion aimed to enhance understanding of these provisions.