Service tax adjustment

[vikas girdhar]

whether service tax payment can be adjusted with service tax receipt from the same party, if so what is the procedure.

[Surender Gupta]

NO, you have to discharge your service tax liability independently and the order party has to discharge his liability independently. You just can not set off the liability with each other. However, you would be eligible to claim cenvat credit if one service is used to provide another service.

AI Summary

Service tax set-off prohibited; liabilities must be discharged independently, though Cenvat credit may be claimed where services are used. Set-off of service tax liabilities between parties is not permitted; each person must discharge service tax independently. However, where one taxable service is used to provide another taxable service, the recipient may claim Cenvat credit under the input credit mechanism rather than directly adjusting liabilities with the counterparty.