SERVICE TAX PAID / INVOICE RETURN

[MV GANGADHARAN]

Dear Sir / Madam

The party paid service tax on accrual basis. But the same has not been received from the customer due to cancellation of bill. Can we claim it as refund.

[KASTURI SETHI]

Sh.Gangadharan M.V. Ji,

Yes you can claim refund. As per Section 65 B (44) “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-

If no consideration is received, no service provided. You can claim refund with documentary evidence i.e. Cancelled invoice and proof of non-receipt of payment from service receiver.

[Ganeshan Kalyani]

Adjustment against ST payable should also be looked into.

[KASTURI SETHI]

Yes, Sir. Such type of excess payment can be adjusted in the following quarter/month in terms of Rule 6(4A) of Service Tax Rules, 1994.

AI Summary

Service tax refund where no consideration received; claim with cancelled invoice or adjust against future tax liability.
If consideration for a billed service is not received and the invoice is cancelled, the payer may claim a refund of service tax by submitting the cancelled invoice and proof of non receipt of payment. Alternatively, the excess service tax payment can be adjusted against future service tax liability in the subsequent return period under the statutory adjustment mechanism; taxpayers should consider adjustment against outstanding service tax payable before pursuing a refund.