payment of service tax on exempted entity

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 December 2010 One of client engaged in commercial civil construction activity paid service tax on bill charged for construction of univercity educational building.
The service tax paid by him is borne by him as tender condition clearly shows that
any tax shall be born by builder.

What is the procedure to be followed ? whether any time limit for refund of claim? which form to be fiiled up?

Guest

Guest (Expert)

27 December 2010 Refund for what?

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2010 naturally it is a question of service tax refund which paid by mistake where there is no such liability.

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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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09 August 2024 If a service provider has paid service tax on an exempted service, such as construction services for an educational institution, and the service tax should not have been charged as per the conditions, the provider may claim a refund of the service tax paid. Here’s a step-by-step procedure to follow for claiming a refund:

### **1. Eligibility for Refund**

- **Nature of Service:** Ensure that the service provided qualifies as an exempt service. In this case, construction services for educational institutions are generally exempt.
- **Tender Condition:** Confirm that the tender condition specifies that any tax shall be borne by the builder, implying the service tax should have been included in the contract value, not paid separately.

### **2. Time Limit for Refund Claim**

- **Time Limit:** Generally, the claim for a refund of service tax should be filed within one year from the relevant date, which is usually the date of payment of the service tax or the date on which the service tax was levied.

### **3. Procedure for Filing Refund Claim**

**a. **Gather Documentation:**
- Proof of payment of service tax.
- Copy of the invoice issued with the service tax.
- Tender conditions specifying tax obligations.
- Details of the service provided.

**b. **File Refund Application:**

- **Form to be Used:** Use **Form R** for claiming a refund of service tax. This form is available on the CBEC-GST website or the CBEC-GST portal.

- **Online Filing:** The application for refund should be filed online through the CBEC-GST portal. Ensure that you have the necessary digital signature for submitting the application.

- **Manual Filing:** If online filing is not possible, the refund claim can also be filed manually with the concerned jurisdictional service tax office.

**c. **Supporting Documents:**
- A copy of the challan evidencing payment of service tax.
- A copy of the invoice on which service tax was charged.
- Proof of service provided.
- Any other relevant documents supporting the claim.

**d. **Submission and Follow-Up:**
- Submit the refund application along with the supporting documents to the service tax department.
- Keep a copy of the submitted documents and acknowledgment for future reference.
- Follow up with the service tax department if there is no response within the stipulated time.

### **4. Refund Claim Process**

- **Scrutiny:** The service tax department will scrutinize the application and the supporting documents.
- **Verification:** The department may conduct a verification of the details provided.
- **Refund Order:** If the claim is found valid, a refund order will be issued, and the amount will be credited to the claimant's bank account.

### **5. Additional Considerations**

- **Interest on Refund:** If the refund is delayed beyond the stipulated time, the claimant may be entitled to interest on the refund amount as per the provisions of the service tax law.
- **Record Keeping:** Maintain proper records of all refund claims and related documents for audit and future reference.

### **Example of Filling Form R**

**Form R** is divided into several sections, including:

- **Part A:** Basic details of the applicant.
- **Part B:** Details of the refund claim, including the amount and reason.
- **Part C:** Details of the payment of service tax and related documents.

Ensure that each section is filled accurately and completely, and all supporting documents are attached.

**Summary:**

To claim a refund of service tax paid erroneously on an exempted service, follow the procedure outlined above. Ensure that all necessary documentation is in place and the claim is filed within the prescribed time limit. For detailed guidance, refer to the CBEC-GST website or consult with a tax professional.