PROCEDURAL ASPECTS

PROCEDURAL ASPECTS

III.          SERVICE TAX COLLECTED FROM THE RECIPIENT OF SERVICE MUST BE PAID TO THE CENTRAL GOVERNMENT [SECTION 73A]

Every person, who is liable to pay service tax and has collected any amount in excess of the service tax assessed or determined and paid on any taxable service from the recipient of taxable service in any manner as representing service tax, must pay the amount so collected immediately to the credit of the Central Government. This provision ensures that the service provider does not collect excess amount from the recipient of the service in the name of service tax.

Further, where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person should also immediately pay the amount so collected to the credit of the Central Government.

1. INTEREST ON AMOUNT COLLECTED IN EXCESS [SECTION 73B]

Where an amount has been collected, in excess of the tax assessed or determined and paid, for any taxable service from the recipient of such service, the person who is liable to pay such amount shall, in addition to the amount, be liable to pay interest. The interest shall also be payable by the person who has collected any amount, which is not required to be collected as service tax.

The interest shall be payable at the rate of 13% per annum from the first day of the month succeeding the month in which the amount should have been paid till the date of payment of such amount.

Where such amount is reduced or increased in appeal, the interest payable thereon shall be on such reduced or increased amount.

1. MISCELLANEOUS NOTES
2. Sub-contractors liable to service tax:

A taxable service provider outsources a part of the work by engaging another service provider, generally known as sub-contractor.

Service tax is paid by the service provider for the total work. A question arises as to whether service tax is liable to be paid by the service provider known as sub-contractor who undertakes only part of the whole work.

A sub-contractor is essentially a taxable service provider. The fact that services provided by such sub-contractors are used by the main service provider for completion of his work does not in any way alter the fact of provision of taxable service by the sub-contractor.

Service tax is, therefore, leviable on any taxable services provided, whether or not the services are provided by a person in his capacity as a sub-contractor.

2. Advance payment of service tax

Assessee can make an advance payment of service tax and adjust the amount so paid against the service tax which he is liable to pay for the subsequent period. However this facility shall be subject to following conditions:

(i) He shall intimate the details of the amount of service tax paid in advance, to the Jurisdictional Superintendent of Central Excise within a period of 15 days from the date of such payment, and

(ii) He shall indicates the details of the advance payment made, and its adjustment, if any in the subsequent return to be filed under section 70.

3. Service tax paid to CG, However taxable service not so provided by him

Rule 6(3) of Service Tax Rules, 1994.

Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received.

Analysis

• Assessee has paid to the credit of Central Government service tax in respect of a taxable service,
• which is not so provided by him either wholly or partially
• for any reason,
• the assessee may adjust the excess service tax so paid by him (calculated on a pro rata basis) against his service tax liability for the subsequent period,
• if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received.

In such cases of adjustment, the assessee is required to file the details in respect of such suo motu adjustments done by him at the time of filing the service tax returns. The return Form ST-3 also provides for enclosure of documentary evidence for adjustment of such excess service tax paid.

Illustration

Individual assessee paid Rs.60,000 in excess of service tax liability during the previous half year ending period, the assessee can adjust Rs.30,000 only per quarter in his subsequent tax liability and not at a stretch.

Company assessee has paid Rs.60,000 in excess of service tax liability during the previous half year ending period, the assessee can adjust Rs.10,000 only per month in his subsequent tax liability and not at a stretch.

4. Adjustment of Excess Amount Paid Towards Service Tax Liability

Where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be. However, such an adjustment is subject to the following conditions:

• Self-adjustment of excess credit would not be allowed in case of reasons involving
  1. interpretation of law,
  2. taxability,
  3. classification,
  4. valuation or
  5. applicability of any exemption notification.
• Excess amount paid and proposed to be adjusted should not exceed 1,00,000 for the relevant month or quarter.

However, in case of assessees opting for centralized registration excess amount can be adjusted without any monetary limit provided the excess amount paid is on account of delayed receipt of details of payments from branch offices. (Centralized registration can be obtained when an assessee provides taxable service from more than one premises on fulfillment of certain specified conditions2).

• Adjustment can be made only in the succeeding month or quarter.
• The details of self-adjustment should be intimated to the Superintendent of Central Excise within a period of 15 days from the date of such adjustment.

Special note:

In case of renting of immovable property service, a deduction of property taxes paid in respect of the immovable property is allowed from the gross amount charged for renting of the said immovable property vide Notification No.24/2007 ST dated 22.05.2007. However, where any amount in excess of the amount required to be paid towards service tax liability has been paid on account of non-availment of such deduction, such excess amount may be adjusted against the service tax liability within 1 year from the date of payment of such property tax. The details of such adjustment shall be intimated to the Superintendent of Central Excise having jurisdiction over the service provider within a period of 15 days from the date of such adjustment.

5. Provisional payment of service tax

In case the assessee is unable to correctly estimate, at the time of the deposit, the actual amount of service tax for any month or quarter, he may make a written request to Assistant/Deputy Commissioner of Central Excise for making payment of service tax on provisional basis. The concerned officer may allow payment of service tax on provisional basis on such value of taxable service as may be specified by him.

For the purpose of provisional assessment at the time of filling the return, the assessee is required to file a statement in form ST-3A giving detail of difference between service tax deposited and the service tax liable to be paid for each month. The quarterly or half yearly statements should also accompany.

The Assistant/Deputy Commissioner of Central Excise, on the basis of memorandum in form ST-3A may complete the assessment after calling for necessary documents or records, if any.

Procedure for Provisional Payment

6. Special provision for payment of service tax in case of air travel agent

Person liable for paying service tax in relation to the services provided by an air travel agent has an option to pay an amount calculated at the rate of:

(i) 0.6% of the basic fare in the case of domestic bookings, and

(ii) 1.2% of the basic fare in the case of international bookings,

of passage for travel by air, during any calendar month or quarter, as the case may be, towards the discharge of his service tax liability instead of paying service tax @ 10%.

The option once exercised applies uniformly in respect of all the bookings of passage for travel by air made by him and cannot be changed during a financial year under any circumstances.

The expression "basic fare" means that part of the air fare on which commission is normally paid to the air travel agent by the airline.

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