Claim of service tax

[Asked by Guest]

If a Service provider does not bill for service tax in his bills (Even though the services provided are within the purview of service tax) and has been paid as per the bill levied, Can he legally claim service tax afterwards. Is the Organisation utilising the services legally bound to pay service tax thereafter ?

[Surender Gupta]

In fact this is question of mutual understandings. However, if the service provider has paid the amount of service tax in response of demand raised by teh Service Tax Department, you may pay the same to the service provider after having the proof and against those proofs you can claim Cenvat Credit.

If you have received payments of over Rs.4.00 lakhs for taxable services provided, you have to pay service tax once you cross the limit. If you do not collect it, then it is deemed to be collected. Therefore for every Rs.100 you do not collect service tax, Rs.10.91 will be deemed to be service tax (Rs.89.09 + 12.24% Service Tax = Rs.100 of Bill. If you have received Rs.3.00 lakhs in the financial year register yourself and if you cross 4 lakhs but choose to absorb the levy without billing your customer use the above calculation.

AI Summary

Service tax liability: providers must register and pay when taxable turnover is reached, with deemed collection consequences.
If the tax authority raises a demand the provider remains liable to pay; the recipient may reimburse the provider upon production of proof and can claim Cenvat Credit. Crossing the statutory turnover threshold triggers registration and payment obligations, and failure to collect tax can invoke deemed collection treatment, producing retroactive tax and compliance consequences.