Excess Payment of Service Tax

[RAJENDRA KHOMNE]

Sir,

Good Morning,

For year end, Service Tax Due date is 31st March. But some party's bill not come before 31st March, hence we paid service tax approximately. After all bills booking we find that we have paid service tax excess in some services & short in some services. My query is can we adjust excess service tax for short payment. (For Example. for Advocate Service we have paid ₹ 2800/- Short & for Manpower we have paid ₹ 2800/- Excess)

And other query is if we paid excess service tax can we adjust it for next month payment.

Sir, Pl Guide

Thanks,

Khomne R. M.

[Rajagopalan Ranganathan]

Sir,

Rule 6 (4A) of Service Tax Rules, 1994 states that " 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.

Therefore you can adjust tax paid in excess during a particular month against tax payable for subsequent month. Adjustment of tax paid in excess against tax short paid is not permissible under law. Where you have short paid the tax you have to pay the difference with interest. Tax paid in excess can be claimed as refund subject to doctrine of unjust enrichment.

[MUKUND THAKKAR]

Nicely explain by Rajagopalan Ranganathan sir, I am agree with your view.

[Ganeshan Kalyani]

Sir if the tax codes are for statistical purpose only, then the service tax paid in excess under one service category should not be denied to the assesse to be adjusted against laibility payable for another service. Please discuss.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Really Very Very Intelligent cross question by you.Thought provoking. With the omission Section 65 and 65A, no legal force in old accounting codes. So there should be no problem in adjustment of amount of ST paid in excess. You are totally on right track. At the same time I am very eager to know the views of Sh.Rajagopalan Ranganathan Sir and Sh.Mukund Thakkar, Sir.

No assessee should suffer for procedural lapses, especially, in view of the fact that rate of interest is different for delayed refund and recovery of short levy/payment.

[Suryanarayana Sathineni]

One can also recollect that the CBEC from 1.7.2012 introduced only 3 or 4 accounting codes for Service Tax, Edu. Cess, and SHE Cess, interest and penalty.

Latter, they have advised to use all the earlier codes ( service wise0. While saying/advising it was clearly said that the re-introduction of the old codes are only for the statistical purposes and not other wise.

Best Regards

Suryanarayana

[Ganeshan Kalyani]

Thanks Sri Kasturi Sir and Sri Surya Sir for backing my contention. Thanks.

[KASTURI SETHI]

Dear Sirs,

In this way we learn from each other.

[DR.MARIAPPAN GOVINDARAJAN]

The views of Sri Rajagopalan Sir is correct in one way. But we have to consider them discussions of Shri Ganeshan and Shri Suryanarayana. Otherwise the classification of service again will come and the problems will arise again. But we don't know the stand of department in this regard.

[Ganeshan Kalyani]

Sir we should take up this issue with the department at the right time and in the right forum. It will solve problems of N number of assesses who are also facing such issues and who also would like to seek a clarify in this regard. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

There is no harm in raising the issue before the department. But I am still of the view that old (erstwhile) accounting codes without any statutory provisions are just for easing the understanding of any service for proper classification only. Just for convenience of assessees. These have become, "PRIVATE" like non-statutory Cenvat records i.e. RG. 23 A Pt.I & II, RG 23C Part I. & II. I do not challenge the Rule quoted by Sh.Ranganathan, Sir. But practically, in absence of statutory provisions regarding accounting code (old), excess amount/short amount of ST can be adjusted without applying for refund of excess paid.

AI Summary

Excess service tax adjustment: excess can offset the succeeding period, shortfalls require payment with interest.
Excess service tax paid in a month or quarter may be adjusted against the succeeding period's liability, but cannot be set off against a shortfall in the same earlier period; short payments require payment with interest and excess payments are refundable subject to unjust enrichment. Administrative practice on accounting codes complicates cross service adjustments, generating calls for departmental clarification to avoid penal outcomes from mere classification or timing mismatches.