Procedure to cancel a service tax invoice

This query is : Resolved

Report Abuse Follow Query Ask a Query

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2013 can any body let me know what is the procedure to cancell a service tax invoice?

RENGARAJ R.K

RENGARAJ R.K (Expert)
Follow

24 September 2013 Query is Not clear. Cancelling the invoice manually or system generated? Is it current month or last month-No information?

Any how, For both, cancel all the copies of the bill, and generate your turnover without this bill value.

If it is last month, kindly issue credit note to cancel the invoice.

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2013 sir,
thanx for ur reply

if it is this month invoice then what to do if we have already issue other invoices after that and service tax yet to deposit.

or in second case

if the invoice related to last month and we had already deposit service tax but return has not submitted . can we issue a credit note & reverse sevice tax amount also.

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

10 August 2024 Canceling a Service Tax invoice involves several steps, depending on whether the invoice is for the current month or a previous month. Here’s a detailed procedure for handling both scenarios:

### 1. **Canceling a Service Tax Invoice for the Current Month**

If you need to cancel a Service Tax invoice issued in the current month, follow these steps:

#### **A. Issuing a Credit Note**

1. **Prepare a Credit Note:**
- **Create a Credit Note:** Draft a credit note to cancel the effect of the original invoice. Include details such as the original invoice number, date, and the reason for issuing the credit note.
- **Mention the Original Invoice Details:** Clearly state the invoice number and date of the original invoice being canceled.

2. **Adjust the Service Tax Amount:**
- **Reverse Service Tax:** The credit note should indicate the amount of Service Tax that is being reversed.
- **Update Records:** Ensure that your accounting and Service Tax records are updated to reflect the credit note and the reversal of Service Tax.

3. **Issue the Credit Note to the Customer:**
- **Send the Credit Note:** Provide the credit note to the customer, ensuring they acknowledge the cancellation.

4. **Update Your Returns:**
- **Include the Credit Note in Your Return:** When preparing your Service Tax return for the current month, include the details of the credit note. This will adjust the Service Tax payable for the period.

#### **B. Adjust the Service Tax Payment**

1. **Recalculate Service Tax Liability:**
- **Adjust Service Tax Payment:** If you have already paid Service Tax on the original invoice, you will need to adjust your payment. The reversal of Service Tax through the credit note will reflect in your current month’s Service Tax liability.

2. **Deposit the Correct Service Tax Amount:**
- **Make Payment Adjustments:** Ensure you deposit the correct amount of Service Tax as per the revised figures, considering the credit note.

### 2. **Canceling a Service Tax Invoice for a Previous Month**

If the invoice pertains to a previous month and you have already deposited the Service Tax, follow these steps:

#### **A. Issue a Credit Note**

1. **Prepare a Credit Note:**
- **Create a Credit Note:** Draft a credit note similar to the procedure for current month invoices, mentioning the original invoice details and the reason for the credit.

2. **Adjust the Service Tax Amount:**
- **Reverse Service Tax:** Indicate the amount of Service Tax being reversed in the credit note.

#### **B. Reversing Service Tax**

1. **Adjust Your Service Tax Return:**
- **Prepare Revised Return:** Since the return for the previous month has not been filed, you can adjust the credit note amount in your revised Service Tax return for that period.
- **Include Credit Note Details:** Clearly mention the credit note details in your revised return.

2. **Submit the Revised Return:**
- **File the Revised Return:** Submit the revised Service Tax return reflecting the credit note adjustments and the reversal of Service Tax.

3. **Seek Refund or Adjust Future Payments:**
- **Claim Refund:** If the Service Tax amount paid is more than what is required after adjusting for the credit note, you can apply for a refund of the excess amount.
- **Adjust Future Payments:** Alternatively, you can adjust the excess amount against your future Service Tax liabilities if a refund is not feasible.

#### **C. Notify the Department**

1. **Inform the Tax Authorities:**
- **Submit Documentation:** If required, submit the credit note and other relevant documents to the Service Tax authorities for record-keeping.

2. **Maintain Records:**
- **Keep Records:** Ensure you maintain proper records of the credit note, adjustments, and revised returns for future reference and audit purposes.

### Summary

- **For Current Month Invoice:** Issue a credit note, adjust the Service Tax payment, and include it in the current month’s return.
- **For Previous Month Invoice:** Issue a credit note, adjust the Service Tax in the revised return, and seek a refund or adjust future payments.

Always ensure that all adjustments and changes are properly documented and reflected in your Service Tax records and returns. For specific advice or complex scenarios, consulting with a tax advisor or professional may be beneficial.