service tax applicability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2011 A manpower supply firm got ST registration getting service charges which is below 9 lakhs p.a. In some of its bills parties deducting service tax and issuing one cheque for ST deduction and another one for balance payment. In case of some other bills the firm is collecting ST from the parties. Now the firm is required to file the ST returns. or it can file the returns only after its receipts exceeds maximum limit. If ST collected is not remitted then what procedure to be adopted to comply ST provisions.

CA Manikandan.A.V

CA Manikandan.A.V (Expert)
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19 June 2011 as per the provisions, you need not register till your gross value of services does not exceed 9 lacs. But it is optional on the point of service provider before 9 lacs limit. But, in my opinion if you are collecting ST, you should register and pay the same immediately to avoid penal action in future.

CA Rudresh SR

CA Rudresh SR (Expert)
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19 June 2011 Once you collect service tax from customer you should get registered yourself under service tax and remitt the same to the govt. with in the due date.

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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19 June 2011 aS PER THE PROVISION OF SERVICE TAX ACT IF A DEALER OR PROFESSIONAL'S GROSS BILLING IS LESS THAN 10 LACS, HE NEED NOT CHARGE THE SERVICE TAX IN HIS BILLS BUT IN THE BILLS A FOOTE NOT BE INSETED THAT AS AND WHEN SERVICE TAX IA APPLICABLE THE SAME IS TO BE CHARGED. AT PRESENT SERVICE TAX IS PAYABLE ONLY WHEN IT IS REALISED. THE PROBLEM COMES WHEN IN ONE YEAR YOUR BILLING IS LESS THAN 10 LACS AND IN THE NEXT YEAR ALSO THE BILLING IS ALSO LESS THAN 10 LACS AND YOU ARE MAINTAINING THE ACCOUNTS ON CASH BASISI THEN THE PROBLEM WHICH IS TO BE FACED IS THAT YOU HAVE NOT CHARGED SERVICE TAX BUT AS YOUR COLLECTION IS MORE THAN THE EXEMPTED LIMIT YOU HAVE TO PAY THE SERVICE TAX.

THE OTHER WAY ROUND IS WHEN YOU ARE NOT SUPPOSE TO CHARGE SERVICE TAX AND YOU HAVE CHARGED THE SAME THEN IT IS YOUR DUTY TO PAY IT TO THE CREDIT OF THE GOVERNMENT AS YOU HAVE COLLECTED THE SAME ON BEHALF OF THE GOVERNMENT. IF YOU FAIL TO MAKE THE PAYMENT THEN IT IS A CRIME AND YOU MAY BE CHARGED WITH PENALTIES AND INTEREST.

NOW TO SOLVE YOUR PROBLEM. YOU ADD THE AMOUNT OF SERVICE TAX IN THE BILL WITHOUT MENTIONING SERVICE TAX SEPARATELY NOTHING WILL HAPPEN AS YOU HAVE NOT CHARGED THE SERVICE TAX. IN THIS PROCESS YOU HAVE NOT VIOLATED ANY OF THE PROVISIONS AND YOU NEED NOT DEPOSIT THE SERVICE TAX AND NO INTEREST OR PENALTY CAN BE LEVIED ON YOU.

Querist : Anonymous

Querist : Anonymous (Querist)

19 June 2011 My sincere thanks for all who spent their valuable time for giving clarification.