credit booking

This query is : Resolved

Richa Mangal (Querist)
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23 October 2016 a service provider raised a bill nd deduct service tax two yrs ago and also paid to govt... but cant get the payment till now from SR and SR deny for payment...whether he can book the credit of service tax paid...plz ans. with supportive section...

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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23 October 2016 The service tax paid to the govt is final. The service was rendered and invoice raised. Since the recipient is denying the liability issue a Credii Note - for the full amòunt of services rendered and deduct the tax due from the current month's liability. There is no other way the credit can be taken.

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Richa Mangal

Richa Mangal (Querist)
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23 October 2016 but if SR deny for a part of payment...?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 July 2024 In the scenario where a service provider has raised a bill, deducted service tax, paid it to the government, but has not received payment from the service recipient (SR) who denies payment, the service provider faces a challenge in booking the credit of service tax paid if the consideration for the service (i.e., the payment) has not been received.

### Relevant Provision:

Under **Service Tax Rules, 1994**, specifically **Rule 6(3)**, the conditions for availing credit of service tax paid are stipulated. According to Rule 6(3):

- **Credit Availment Condition**: Service tax credit can generally be availed by the service provider on the basis of:
- Payment of the value of taxable service provided or agreed to be provided,
- To the extent of such value,
- Upon receipt of payment of the amount towards the value of taxable service provided or agreed to be provided.

### Implications for the Scenario:

1. **Payment Condition**: Since the service provider has not received payment from the service recipient (SR), there is a potential issue in satisfying the condition of payment under Rule 6(3).

2. **Booking of Credit**: The service provider may face difficulties in booking the credit of service tax paid if payment from the service recipient has not been received. This is because the credit of service tax paid is typically linked to the actual receipt of consideration for the taxable service provided.

3. **Section 67 of Finance Act, 1994**: This section defines the valuation of taxable services, but does not directly address the issue of booking credit in cases where payment has not been received. Therefore, Rule 6(3) of the Service Tax Rules, 1994, remains the primary regulation governing the credit availment process.

### Conclusion:

In conclusion, based on Rule 6(3) of the Service Tax Rules, 1994, and the condition that service tax credit can only be availed upon receipt of payment for the taxable service provided, the service provider may not be able to book the credit of service tax paid if the payment has not been received from the service recipient. It is essential for the service provider to pursue the matter of payment from the service recipient separately while adhering to the provisions of the Service Tax Rules for credit availment.