Hello,
One company pays its reverse charge service tax liability on accrual basis(rather than payment basis as mentioned under Rule 7) since it is very difficult to keep track of payments as compared to keeping track of invoices. So for eg. if an invoice is received dated April and the payment of that invoice is made on June, the Company would have made the payment in April itself rather than June. The Company is following this policy since many years.
However, in this year could be a problem because in April the rate of Service Tax was 12%(plus cess) whereas in June it is 14%(no cess). So there could be a case that the Company is accused of short paying Service Tax to that extent. But the Company maintains that since it is following this policy since a long time, it will not deviate from its policy.
However, in this year could be a problem because in April the rate of Service Tax was 12%(plus cess) whereas in June it is 14%(no cess). So there could be a case that the Company is accused of short paying Service Tax to that extent. But the Company maintains that since it is following this policy since a long time, it will not deviate from its policy.
Is the Company in default? Or is this behaviour acceptable?
CAclubindia
