Refunds
Indian Service Tax
Refunds
Q. Is the Service Tax payable by the assessee, even in cases where his clients do not pay for the service rendered or pay only a part of the bill raised in this regards?
Ans. The Service Tax is required to be paid only on the value of taxable service received in a particular month or quarter as the case may be and not on the gross amount 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 assessee are required to amend the bills either by rectifying the existing bill or by issuing a revised bill and by properly endorsing such charge in the billed amount. In case an assessee fails to do so, his liability to pay Service Tax shall be on the amount filled by him to the client for the services rendered.
Q. Can any adjustment of tax liability be made by an assessee on his own in cases where Service Tax has been paid in excess?
Ans. Yes. Facility for adjusting excess payment of service tax by the assessee towards future liability is now provided for in the law. In cases, where an assessee has paid to the credit 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-moto 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.
Q. How the adjustment of excess tax paid by the assessee is made on his own on prorata basis?
Ans.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.(l) 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 subsequently 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.
Q.What is the procedure for claiming refund?
Ans. The procedure for claiming refund for the amount due from the Department is as mentioned below:
(i) Submission of application in prescribed Form-R in triplicate to the jurisdictional Assistant Commissioner.
(ii) Application should be filed within the prescribed period, i.e. before the expiry of six months from the relevant date as defined in Section IIB of the Central Excise Act, 1944 which is made applicable to service refund matters also.
Application should be accompanied by documentary evidence to establish that the amount of Service Tax in relation to which such refund is being claimed has been paid by the assessee in excess and the incidence of such tax had not been passed on to any other person.
Q. What is the "relevant date" for calculation of limitation period of six months in respect of filing refund claims related to service tax?
Ans. The "Relevant Date" for the purpose of refund (under section IIB of CEA 1944) is date of payment of Service Tax. Thus, the limitation period of six months is to be calculated from the said date.
Head of Account
Cir. No. 24/1/98
Date 23/4/1998
Sub:- Service Tax - Revenue refund under Head of Account 0044-Service Tax.
A doubt has arisen whether Bank Branches nominated for collection of central excise, customs and other dues and payment of refunds etc. under major head of account No. 037-Customs and 038-Union excise duties are equally authorised for collection and payment of refunds etc. under Head of Account No. 0044 - Service Tax.
The matter has been examined. The existing scheme as applicable to collection & accounting of central excise, customs, and other dues and payment of refund, rebate and drawbacks etc by the branches of Public Sector Bank is equally applicable to Service Tax also. Accordingly, instructions issued by Reserve Bank of India vide Circular No. GAINB. No. 95/41.01.001/94-95, dated 14/7/1994 for collection and accounting of central excise, customs and other dues and payment of refunds, rebates and drawbacks etc. by the branches of PublicSector Bank will applymutatis mutandis in respect of receipt, reporting, accounting of service tax collection as well. A copy of RBI's instruction is also enclosed for information.
Copy of Letter No. Coord/13-6/94-95/Service Tax/1129, dated 31st March, 1998 received from Dy. Controller of Accounts, CBEC, New Delhi, addressed to Sanghamitra Panda, Director (CX-4)
Subject: Service Tax - Revenue refund under Head of Account 0044Service Tax - Regarding
In this connection it is stated that the instructions contained in the revised Memorandum of instructions issued by the Reserve Bank of India for collection and accounting of Central Excise, Custom and other dues and payment of refund, rebate and drawbacks etc. by the branches of the Public Sector Bank will apply "mutatis mutandis" in respect of Service Tax as well. In this connection a copy of the RBI's Circular No. GA.NB. No. 95/41.01.001/94-95, dated 14/7/1994 is enclosed.
Yours faithfully,
Sd/
Dy. Controller of Accounts
RBI's Letter No. GA.NB.No. 95/41.01.001/94-95, dated 14th July, 1994, addressed to the Chief General Managers of State Bank of India and its associates and to the General Managers of Nationalised Banks.
Subject: Levy of service tax on telephones, insurance and stock brokerage - Procedure for receipts/accounting
As you are aware, Government of India in the Budget 1994-95 proposed to levy a service tax on Telephones, Insurance and Stock brokerage. Accordingly, Government of India have since decided to implement the proposal for levy of service tax with effect from 1st July, 1994. We forward herewith a copy each of the Notifications Nos. 1/94 and 2/94, dated the 28th June, 1994 issued in this regard by the Ministry of Finance, Department of Revenue for your information.
The salient features thereof are briefly given below:
(i) Details of service tax sought to be levied and manner of collection Service Tax on services provided to-
(a) an investor by a stock broker in connection with the sale and purchase of securities.
(b) a subscriber by the telegraph authority in relation to a Telephone connection.
(c) a policy holder by an insurance company in relation to general insurance business.
(ii) Banking arrangements for collection of service tax.
The existing scheme as applicable to the collection of Central Board of Excise & Customs (CBEC) revenue is applicable to the collection of service tax. Accordingly, the assessees as defined in para 2 of the Notification No. 2/ 94, dated 28th June 1994 (vide Annexure), will deposit the collections into the existing authorised branches of the nominated banks including sub-agency banks under CBEC collection, scheme. The assessee will tender the amounts along with a challan, in Form TR-6, in quadruplicate, (by the 15th of the month immediately following the calendar month) as in the case of other CBEC dues viz. 0037-Customs, 0038-UED. The specimen of challan to be used by the assessee is enclosed to the copy of notification.
(iii) Head of Account
The service tax so collected by the assessees will be credited to 0044 Service Tax.
(iv) Reporting and Accounting System
(a) The scheme of collection of service tax will be operated by Central Board of Excise & Customs.
(b) As stated above the banks presently nominated for collection of CBEC revenue have been entrusted with the collection of revenue on account of Service Tax as well for the present.
Accordingly, the instructions contained in the Revised Memorandum of instructions for collection and accounting of Central Excise, Customs and other dues and payment of refunds, rebates and drawbacks etc. by the branches of public sector bank (effective from 1st April 1986) issued by us will apply, mutatis mutandis,in respect of receipt, reporting, accounting of 'Service Tax' collections as well.
As the Service Tax is leviable with effect from 1st July, 1994, we shall be glad if you will please issue instructions immediately to the concerned branches to accept the service tax tendered by the assessees for eventual credit to Government Account in terms of CBEC collection procedure.
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