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Service tax short payment of bill

Ankur Chauhan (CA Job) (48 Points)

21 March 2013

Hello everyone.we are a private ltd co and we hire security services for our site.they raise the bill adding their part of service tax i.e. 25% of total service tax under reverse charge mechanism. For the mnth of feb 2013 they have raised a bill of rs 137000 including st. But we are deducting rs 2500 for negligence in services. Are we required to pay service tax on rs 2500 that we are deducting?what are the other ways?the bill doesnt have any mention of rs 2500.it is gross.

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2 Replies

C.A.M.S.ROY (C. A.) (478 Points)
Replied 21 March 2013

asked the creditor to issue the credit note in your name for short payament of rs.2500 including service tax. Then you need not to pay the tax on 2500/-. The actual position of law is that ,in case of RCM point of taxation is attracted at the amount of payament made provided payament must be made within 6 m, but in practice service tax is generally paid by assessee on accrual basis also in case of RCM.

if you have already paid tax on 2500/- you can adjust st on 2500/- against subsequent month liab. of service tax.

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Ankur Chauhan (CA Job) (48 Points)
Replied 21 March 2013

Thankew ms. But i think credit note with a separate mention of st will also work na?for example Basic 2500 St 76 Total2576 This is because we r not gonna pay ultimately st on 2500. N thats why we should be credited by rs 2576 in creditors books. Am i right? And plz confirm that this will work even though the original bill charges and shows st on total i.e. including rs 2500.