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Exces st adjustment(urgent)

ANKSS (CA) (151 Points)

10 January 2011

I have one client which provided services to its associate. Since it provided service to associate therefore st shud be paid on billing or receipt whichever is higher.

April

Billing (inc st) : 15,00,000

Recd: 21,00,000

St paid : 2100000/110.3*10.3

Excess St paid: 5,60,29 (600000/110.3*10.3)

May

Billing (inc st) : 15,00,000

Recd: 12,00,000

St paid : 15,00,000/110.3*10.3 - 56029

Is the adjustment of excess st paid in april 56029 is correct.?

can they do so?

is there any monetary limit?

do intimation has to be sent to jurisdictional SCE?

NOTE

Excess amt received is not on account of delayed receipt of details of payments from other premises.

Excess amount received is to carry out regular operations of the india company.

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6 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 January 2011

transfer the may bills to april in return only,

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ANKSS (CA) (151 Points)
Replied 10 January 2011

So u mean to show all the documentary evidence of st adjustment in return?

can u please further elaborate

thanks

Shyam Lal Naik (Service) (6156 Points)
Replied 10 January 2011

Service tax is payable on cash basis.

In the example there is no excess payment. Question of excess payment and its adjustment does not arise.

ANKSS (CA) (151 Points)
Replied 10 January 2011

Ya I agree that it is payable on cash basis.

But this transaction is with associated enterprise and hence according to me st is payable on all debit and credit to partys account i.e. amount billed or received whichever is higher.

So this client of mine keeps on receiving excess funds then amount billed so as to carry out its operation in India. It can be said as advance received. Hence st is paid on amount received, which is obviously excess st paid by him then received which he adjusts in next month so that he actually pays the st on the amount billed.

For this I am refering rule 6(3) (adjustment of excess st paid) and also 4 conditions to be satisfied for making suo moto adjustment of excess st paid.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 January 2011

as the payment is received in april and service tax paid on payment, so the invoice raised in may, just show that invoice value in april itself,

ST-3 does not ask u more details, but if the values differ they will ask loads of documents over the return,

better way to adjust the april tax in april itself , but showing the may figure of the service in april itself, clarification that advance payment but invoice raised later.