05 June 2012
Many a time person liable for payments of service tax, due to oversight ends up paying excess amount over and above what is required to be paid. In such cases the law provides for two alternatives for rectification of such an error.
(i) The perosn may adjust such excess payments against his future Service Tax liability (Self Adjustment) or
(ii) The person may claim refund of Service Tax paid
According to Rule 6(4A), Service Tax Rules, 1994 where a person has paid any amount in excess of the amount required to be paid towards Service Tax liability for a month or quarter, he may adjust such excess amount paid by him against his Service Tax liability for the succeeding month or quarter. The adjustment is limited to the liability of Service Tax in the subsequent month or quarter
Further such self-adjustment is subject to conditions as per Rule 6(4B)
Self-adjustment is permissible if
(i) Excess Service Tax paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification
(ii) Excess Service Tax amount paid by an assessee having Centralised Registration on account of delayed receipt of details of payments towards Taxable services may be adjusted without monetary limit.
(iii) For assessee other than Centrally registered, specified in (ii) above, the excess amount of Service Tax paid may be adjusted with a monetary limit of Rs. 2,00,000/- (Two lakh) for a relevant month or quarter.
(iv) The details and reasons for such adjustment shall be intimated to the jurisdictional Superintendent of Central Excise within a period of 15(fifteen) days from the date of such adjustment.
In your case the adjustment has been restricted as it is a matter of interpretation as per condition clause (i)
For this purposes intimation is a must before adjustment which should not be ignored, inspite of having ample facts and justifications of amount wrongly paid.
The above understanding is from the text of the act and views expressed are personal.
CAclubindia
