The Service Tax is required to be paid only on the value of taxable services received in a particular month or quarter, as the case may be, and not on

Indian Service Tax

Adjustment Of Excess/Short Payments

The Service Tax is required to be paid only on the value of taxable services received in a particular month or quarter, as the case may be, and not on the gross amount charged or billed to the client. However, in all such cases where the amount received is less than the gross amount charged/billed to the client, the service tax assessees are required to amend the bills, either by rectifying the existing bill or by issuing a revised bill and by properly endorsing such change in the billed amount. In case an assessee fails to do so, his liability to pay service tax shall be on the amount billed by him to the client for the services rendered.

Facility for adjusting excess payment of service tax by the assessee towards future liability is now provide.d for in the law. In cases, where an assessee has paid to the cxedit of Central Government service tax in respect of a taxable service which is not so provided by him either wholly or partially, for any reason, the assessee can adjust the excess service tax so paid by him calculated on a pro-rata basis against his service tax liability for the subsequent period, provided that the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received. However, the assessee is required to file the details in respect of such suo motu adjustments done by him at the time of filing the service tax returns. In all other cases of excess payment, the refund claims have to be filed with the department.

The excess service tax paid in the previous returns period can be adjusted against the tax liability of the subsequent period on prorata basis in terms of sub rule (3) of Rule 6 of Service Tax Rules, 1994. Ex.(1) If the assessee who is an Individual /Proprietary or partnership firm has paid Rs. 6000/- in excess of service tax liability during the previous half year ending period, the firm can adjust service tax for the subsequent period @ Rs. 3000/- per quarter and not at a stretch. Ex.(2) If the assessee who is a Private Limited Company and has paid Rs. 6000/- in excess of the liability of service tax, during the previous half year ending period, the assessee can adjust Rs. 1000/- only per month in his subsequent tax liability and not at a stretch.