PAYMENT OF SERVICE TAX IN EXCESS AND ADJUSTMENT IN SUBSEQUENT MONTHS - WHETHER AMOUNT TO SELF ASSESSMENT?

[Mr. M. GOVINDARAJAN]

According to Sec. 70 of the Finance Act, 1994 ('Act' for short) every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding two thousand rupees, for delayed furnishing of return as my be prescribed.  The self assessment procedure was introduced with effect from 16.07.2001 before that regular assessment was done by the Central Excise Authorities.

     The Act provides, in addition to self assessment, best judgment assessment and provisional assessment.   The Service Tax Rules, 1994 ('Rules' for short) provides the following types of payments:

Payment on self assessment;

·  Advance payment;

·  Provisional payment; and

·  Excess payment.

PAYMENT ON SELF ASSESSMENT:

Rule 6(1) provides that the service tax shall be paid to the credit of the Central Government-

(i) by the 6^th day of the month, if the tax is deposited electronically through internet banking; and

(ii) by the 5^th day of  the month in any other

immediately following the calendar month in which the payments are received, towards the value of taxable services.   The Rule further provides that the service tax on the value of taxable services received during the month of March, or the quarter ending in March as the case may be, shall be paid to the credit of the Central Government by the 31^st day of March of the calendar year.  Under self assessment the assessee could be able to pay the actual service tax before the stipulated period.

     In other three cases the assessee could not able to assess the actual tax to be paid before the due dates.

ADVANCE PAYMENT:

     Rule 6(1A) provides that every person liable to pay service tax may, on his own volition, pay an amount as service tax in advance, to the credit of the Central Government and adjust the amount so paid against the service tax which he is liable to pay for the subsequent period.   In such cases the assessee shall intimate the details of the amount of service tax paid in advance, to the Jurisdictional Superintendent of Central Excise within a period of fifteen days from the date of such payment and indicate the details of the advance payment made, and its adjustment, if any in the subsequent return to be filed under Sec. 70 of the Act. 

PROVISIONAL PAYMENT:

     Rule 6(4) provides that where an assessee is, for any reason, unable to correctly estimate, on the date of deposit, the actual amount payable for any particular month or quarter, as the case may be, he may make a request in writing to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, giving reasons for payment of service tax on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of  Central Excise, as the case may be, on receipt of such request, may allow payment of service tax on provisional basis on such values of taxable service as may be specified by him and the provisions of the Central Excise Rules, 2001, relating to provisional assessment, except so far as they relate to the execution of bond, shall, so far as may be, apply to such assessment.

     Rule 6(5) provides that where an assessee requests for a provisional assessment he shall file a statement giving details of the difference between the service tax deposited and the service tax liable to paid for each month in a memorandum in Form ST-3A accompanying the quarterly or half-yearly return, as the case may be.

     Rule 6(6) provides where the assessee submits a memorandum in Form ST-3A, it shall be lawful for the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, to complete the assessment, wherever he deems it necessary, after calling such further documents or records as he may consider necessary and proper in the circumstances of the case. 

     According to Rule 7 of Central Excise Rules, 2002 Deputy Commissioner has to finalize the assessment and has to pass an order within a period of not exceeding six months and further extended by the Commissioner for another six months and beyond that the Chief Commissioner for such period as deemed fit.

EXCESS PAYMENT:

     Rule 6(4A) provides notwithstanding anything contained in Rule 6(4) which deals with the provisional payment, 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 the service tax liability for the succeeding month or quarter, as the case may be.

     Rule 6(4B) provides for the adjustment of excess tax so paid under rule 6(4A).   The adjustment shall be subject to the following conditions, namely:

excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation of applicability of any exemption notification;

excess amount paid by an assessee who obtained centralized registration on account of delayed receipt of details of payments towards taxable services may be adjusted without monetary limit;

in cases other than specified in above two items, the excess amount paid may be adjusted with a monetary limit of one lakh rupees for a relevant month or quarter, as the case may be;

the details and reasons for such adjustment shall be intimated to the jurisdictional Superintendent of Central Excise within a period of fifteen days from the date of such adjustment.

Rule 6(4C) provides that notwithstanding anything contained in Rule 6(4), 6(4A), 6(4B) where the person liable to pay service tax in respect of  services provided or to be provided in relation to renting of immoveable property 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, on account of non availment of property tax paid in terms of Notification No. 24/2007-ST, dated 22.5.2007, from the gross amount charged for renting of the immoveable property for the said period at the time of payment of service tax, the assessee may adjust such excess amount paid by him against the service tax liability within one 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 fifteen days from the date of such payment.

     Now come to the question arised in the topic.  In my opinion, excess payment of service tax by a service provider amounts to self assessment.   In provisional assessment the written permission of the Central Excise Authorities is required and the amount payable is as specified by him.   In excess payment or advance payment no such permission is required from the Central Excise Authorities and not required to submit Form ST-3A as required in provisional assessment.  Therefore payment of excess amount of service tax does not coming under the purview of provisional assessment.   The service provider before the due date pays the service tax in excess.   After finalizing the service tax he adjusted the excess payment and intimates the same to the jurisdictional Superintendent of Central Excise within fifteen days.   As such it amounts to self assessment. The views of the experts in this regard are solicited.