Wrong Service Category.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 August 2010 A company pays service tax under reverse charge mechanism on import of various taxable services (may be ITSS, BOFS, MRS and MCS) under single service category (MCS).

Please note that there is no revenue loss but just following procedural fault.
1. Non inclusions of services under ST2.
2. Payment of challan under wrong accounting code
3. Wrong disclosure in ST3.

What are the consequences of such payment of reverse charge tax on import of service under wrong service category.

VINOD ARORA

VINOD ARORA (Expert)
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10 August 2010 The treatment of the recipient of service, as the deemed service provider under section 66A is only for the purpose of charging service tax on taxable services received from outside the country. Services provided from outside India and received in India, therefore, not treated as taxable service provided by the recipient for the purpose of CENVAT Credit Rules, 2004. However, where such service is used as an input for providing any taxable output, the service tax paid on such service can be taken as input credit.

1. Non-inclusion in ST 2 has no repercussions as assessee is not providing services of that category and he is just service recepient. ST-2 needs to include services provided by asssessee.
2. Payment of s.tax can be made in the category in which the assessee is registered. I suppose in the given case assessee is regd under MCS, so its ok.
3. Wrong discclosure in ST-3 is something where assessee has the option of filing revised return.

I feel that if the return is revised in due course in this case, there will not be any penal consequences.