SERVICE TAX BILL CANCELLED IN NEXT QTR

[d.v. gupta]

SIR,

WE ARE A PLACEMENT AGENCY . WE HAVE RAISED THE BILLS IN APRIL QTR FOR SERVICES AND PAID THE SERVICE TAX. THE PAYMENT OF BILLS NOT RECEIVED AS THE CANDIDATES LEFT THE JOB BEFOR 30 DAYS. AS WE HAVE PAID SERVICE TAX ON THOSE BILLS , HOW WE SHOULD ADJUST THE SERVICE TAX IN NEXT QTR OR WE SHOULD FORGET THE SERVICE TAX ON BILLS WHICH COULD NOT BE REALISED.

[YAGAY and SUN]

W.E.F. 01-03-2007, Rules have been amended. Accordingly, where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax laibility for the succeeding month or quarter, as the case may be. 

[DEV KUMAR KOTHARI]

I agree with Mr. Khatri.

However, in your case the service is completed when a person placed by you with your client completes agreed time ( say30 days), before that it cannot be said that service was rendered. Therefore, you can raise bill only when you are entitled for service charges.

AI Summary

Service tax adjustment permitted for excess payments; billing and tax liability depend on completion of the agreed service period.
Where service tax has been paid in excess for a month or quarter, the assessee may adjust the excess against the service tax liability for the succeeding period; entitlement to bill and to account for service tax depends on completion of the agreed service period, so invoices raised before the placement term is fulfilled may not reflect a rendered service.