Adjustment of service tax liability - defective invoice

[madhavvan n]

a company has been charging service tax at 12.36% from 24th feb 09 till date what are the consequences can it adjust the excess tax collected against its st liability and can the customers who have received the services claim the cenvat credit on 12.36% or 10.30% and will the st invoice be treated as defective due to wrong st rate charged what are the consequences for the service provider and receiver

[Rama Krishana]

Once you charge service tax at the rate of 12.36% in the bill, even after reduction of rate to 10.3%, you should deposit the same. However, if the service recipient denies to pay you at the rate of 12.6%, you must correct the same either by cancelling the old Invoice or by issuing debit / credit notes to this regard.

[RadheyShyam Mangal]

The service provider has to deposit the excess ST collected. In my opinion the service recepient can avail the cenvat for the ST paid. In case the payment is yet to be made then the service provider can revise the bill and collect correct ST.

AI Summary

Excess service tax collection requires deposit; recipients who paid may claim cenvat credit and invoices should be corrected. Where service tax was charged at a higher superseded rate, the provider must deposit the excess tax collected; if the recipient refuses to accept the higher charge, the provider should cancel the original invoice or issue debit/credit notes. If payment is pending, the provider may revise the bill to the correct rate. A recipient who paid the higher rate may avail cenvat credit for the tax paid, and invoices reflecting incorrect tax rates should be rectified by billing corrections.