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Over/under charge of service tax

Lalit Nyati (Student) (487 Points)

20 February 2014

what's the concequences when SP charge less than 12.36% ST ?

and

What's the concequences when SP charge more than 12.36% ST?

what is the liability of SR in these cases?

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6 Replies

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 20 February 2014

SP cannot charge > 12.36%. It is the highest rate a provider of service can charge.

If SP charges < 12.36% it may be due to the fact it enjoys some abatement say 40%, 60% etc. The receiver does not have any liability to pay the differential amount.

Thanks,

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Lalit Nyati (Student) (487 Points)
Replied 20 February 2014

but SP already charged more than 12.36% than that the consequences??

Is our liability to revise the invoice?

Can we take credit full amount charged by SP or upto 12.36%?

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 20 February 2014

Lalit,

Please show me the invoice. If you do not wish to upload here you can send to my email ID noted here. dipmaj @ rediffmail.com

Regards,

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 21 February 2014

lalit,

I have perused the invoice. Service tax 556 + 3 = 559 on service value 4496. It comes to around 12.43%. I guess its due to rounding it off of figures. Actually, 12% on 4496 comes to 539.52 = 540 , but they have charged 556. You may inform them to revise the invoice or you pay according to the correct calculations and take cenvat credit according to your payment.

Do get in touch if you have any query.

Thanks,

Yashwant Patel (Working with CA firm) (117 Points)
Replied 11 March 2014

Dear Lalit

Service tax has only one rate i.e. 12.36%, service tax can be charged at lower rate if there is any abatement in rate.

Now if anyone is charging service tax at lower rate without any abatement in rate then it will be treated as short payment of service tax and tax preceding may be enunciated on him, which cover notice for short payment of service tax along with Interest and Penalty (penalty is depend on the situation)

If service tax has been charged at higher rate as in your case then

1. You are not bound to pay the extra amount of service tax, you should ask for another invoice and accordingly payment should be made and cenvat credit should be taken.

2. If you have already paid the extra amount of service tax then you can avail the cenvat credit for excess amount too based on judicial judgements.

Its the duty of service provider to pay the total amount of service tax collected from service receiver in the name of service tax to the government.

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Lalit Nyati (Student) (487 Points)
Replied 18 March 2014

friend Yashwant, in your point 2 perhaps assessee can't take the credit more than permission by law I.e. 12.36%..please specify judicial judgement if you have..thanks for answer..