As per Section 73A
Service tax collected has to be paid to the credit of the Central Government in the following cases
- Person liable to pay service tax has collected service tax in excess of the service tax assessed or determined and paid on any taxable service or
- Any person has collected the service tax which is not required to be collected [Sub-section (1) and (2)].
Procedure in case person does not pay such amount
- Show cause notice shall be served by the Central Excise Officer, to such person
- The notice will require such person to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government
- On receipt of such notice, person makes representation to Central Excise Officer
- The Central Excise Officer shall consider the said representation and then determine the amount due from such person.
- Such amount will however, not exceed the amount specified in the notice.
- Thereupon, such person shall pay the amount so determined
Adjustment of Tax Paid
Such amount shall be adjusted against his service tax liability if any
Balance amount if any shall be
credited to the Consumer Welfare Fund,
refunded to the person who has borne the incidence of such amount
as per the provisions of section 11B of the Central Excise Act, 1944).
Procedure for Refund
Such refund is granted only if person makes application for refund within 6 months of date of public notice to be issued by Central Excise Officer for refund of excess amount.
Mr. Saravanan, a service provider, has collected a sum of ` 15,000 as service tax from a
client mistakenly, even though no service tax was chargeable on the service rendered by him.
Mr. Saravanan has not refunded such amount to the client. Should the amount so collected
be remitted to the credit of the Central Government? Explain.
Section 73A of the Finance Act, 1994 casts an obligation on every person who has collected
any amount, which is not required to be collected, from any other person, in any manner as
representing service tax, to forthwith remit the same to the credit of the Central Government.
Hence, Mr. Saravanan has to remit the amount collected mistakenly as service tax to the
credit of the Central Government.
Mr. Rajesh Singla is a service tax assessee. His service tax liability for the quarter
April - June was Rs. 35,000. However, on account of a clerical error, he paid Rs. 3,50,000 as
service tax for the said quarter. Now Mr. Rajesh Singla wants to adjust the excess payment of
Rs. 3,15,000 against his service tax liability for the succeeding quarter. Can he do so? What is
the condition to be satisfied for it?
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/quarter, the assessee may
adjust such excess amount paid by him against his service tax liability for the succeeding
month/quarter. Such adjustment is subject to the condition that the excess amount paid is on
account of reasons not involving interpretation of law, taxability, valuation or applicability of
any exemption notification.
Since Mr. Rajesh Singla has paid the excess amount on account of a clerical error, he can
adjust the excess payment of Rs. 3,15,000 against his service tax liability for the succeeding