Taxability on Internet Telephony service

[Guest]

A company has collected service tax on Internet Telephony for all these years and has now come to know that service tax is applicable on this service only from 1st May 06. Now, a part of the amount collected has not yet been deposited. 1) Should this amount be refunded to the customers or paid to the Service Tax Deptt. 2) As service tax is deposited on collection basis, for the debtors still outstanding, should the service tax portion be collected at all or can revised invoices be raised, nett of service tax, even for prior years?

AI Summary

Company Debates Refunding or Depositing Pre-May 2006 Internet Telephony Tax; Advised to Pay Revenue to Avoid Litigation A company collected service tax on Internet Telephony services before learning that the tax was applicable only from May 1, 2006. They have not yet deposited part of the collected tax. The company is considering whether to refund this amount to customers or pay it to the Service Tax Department. Additionally, they question whether to collect service tax from outstanding debtors or issue revised invoices excluding the tax for prior years. The advice given is to deposit the amount with the revenue to avoid future litigation, rather than refunding customers.