Suppose X company received Rs.1 lac from Y company for the purpose of execution of taxable service. X company has approached to Y company that it is registered with service tax authority and need to collect and remit service tax. X company given an offer to Y company that Rs.1 lac will be the maximum billing inclusive of service tax. Y co. is not willing to accept this proposal. X co. has already deposited the the amount into bank. Now on 5th of next month what X co. will do? 1. Should it deposit proportionate s.tax? 2. It should not, because entire money is to be refunded to Y co. as Y co. is not agreeing with the service terms. 3. X Co. should wait for the time being without depositing tax. When the deal is final then it should deposit s.tax with interest. 4. Is there any provision in S.Tax that when full amount is to be refunded to the service recipient then no need to deposit s.tax on amount receipt in advance.
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