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

Company Overcharged Service Tax by 2.06% Post-Rate Cut; Solutions for Adjusting Excess and CENVAT Credit Explored. A company charged a service tax rate of 12.36% from February 24, 2009, despite a reduction to 10.3%. The issue raised concerns about adjusting the excess tax collected against the company's service tax liability and whether customers can claim CENVAT credit on the higher rate. One response suggested depositing the excess tax and correcting invoices if the recipient refuses to pay the higher rate. Another response advised the service provider to deposit the excess tax and stated that the recipient could claim CENVAT credit for the tax paid. If payment is pending, the bill should be revised.