Payment of Service Tax - Service Tax Practice Manual / Ready Reckoner - Service Tax

Payment of Service Tax A. Due Dates - Rule 6(1) B. Due Date (Last day) is Holiday C. Electronic Payment D. Special provision for Payment through Cheque E. Where to deposit Service Tax F. Rounding off of service tax G. Payment through Cenvat Credit H. No payment through Cenvat Credit I. Interest on later payment of Service Tax J. Payment of Service Tax through agent ================= A. Due Dates - Rule 6(1) Rule 6(1) of Service Tax Rules, 1994 See chapter Due Dates ================= B. Due Date (Last day) is Holiday Service tax is liable to be deposited by the 5 th (or 6 th ) of the month following the calendar month or quarter, as the case may be. The problem arises, if there is a public holiday on the last due date of payment of service tax. In these circumstances, a person can deposit the service tax on the next working day immediately following the holiday. Also see circular no. 63/12/2003 St dated 14/10/2003 . For filing of Service Tax return also, the same rule will apply. Reference may also be taken from Negotiable Instrument Act, 1881 . As per Negotiable Instrument Act, 1881 - When the day on which a promissory note or bill of exchange is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day. Public holiday includes Sundays and any other day declared by the Central Government, by notification in the Official Gazette, to be a public holiday. ================= C. Electronic Payment Rule 6(2) of Service Tax Rules, 1994 Every assesse shall electronically pay the service tax payable by him, through internet banking. Assistant Commissioner or the Deputy Commissioner of Central Excise may after reasons to be recorded in writing, allow the assesse to deposit the service tax by any other mode. ================= D. Payment through Cheque Rule 6(2A) of Service Tax Rules, 1994 It is obvious and nature for the provider of services to pay the amount of service due through account payee cheque and where the payment is made by cheque there is always a time gap of 3-5 days (in normal circumstances) between tendering of cheque in the bank and clearance of the same. As per sub rule (2A) to rule 6 , the date of tendering of cheque shall be the deposit date even if it is cleared after the expiry of due date. But this provision shall not be applicable where cheque is failed to get honour. Note:- In case of genuine difficulty in making payment through electronic mode, the assessee may request the jurisdictional deputy / assistant commissioner seeking permission to make payment through cheque. - See:- F.No 137/08/2013 - 22-7-2016 ================= E. Where to deposit Service Tax The assessee is required to deposit GAR-7 Challan for payment of the service tax only with the designated banks and branches thereof. The bank and branches thereof are designated by the board and respective commissioner. The assessee should ensure that service tax is paid only in the designated branch of the bank authorized to accept the payment of service tax. If the payment is tendered in the branch, which is not designated, then no credit shall be given to the assessee for the payment of service tax made by him. ================= F. Rounding off of service tax Shall be rounded off nearest to rupee. Section 83 of the service tax act read with section 37D of the Central Excise Act, 1944 . ================= G. Payment through Cenvat Credit A person, who is liable to pay service tax, has two options. First either to pay in cash or by cheque or secondly, through debiting the Cenvat Credit register. Cenvat credit is available on inputs / capital goods and input services. Cenvat credit is availed on all these by crediting into the Cenvat Credit register and it get accumulated for the relevant month or quarter as the case may be. An assessee has an option to pay service tax by utilizing such accumulated balance in Cenvat Credit register as stood on the last day of relevant month or quarter as the case may be. W.e.f. 1 st September, 2014, a service provider shall take credits on inputs input services within a period of six months from the date of issue of invoice, bill or challan. Further w.e.f. 1st March, 2015, time limit for availing Cenvat credit has been increased up to one year. It is pertinent to note here that though the service tax can be deposited by 5th or 6th of the month following the relevant calendar month or quarter, but Cenvat credit can be utilized only as available on the last day of relevant month or quarter as the case may be. ================= H. No payment through Cenvat Credit Cenvat credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient i.e. in case of reverse charge. ================= I. Interest on late payment of Service Tax As per Section 75 , where a person is liable to pay service tax u/s 68 and fails to credit the tax or any thereof to the account of the Central Government within the prescribed time limit shall pay simple interest as prescribed in notification issued by Central Government. Detailed provisions have been discussed in Chapter- Interest Penalty. ================= J. Payment of Service Tax through agent As per definition under Section 65 (7) of Finance Act, 1994 , assessee means a person liable to pay service tax and includes his agent. If the tax liability has been discharged by the agent on the service rendered by his principal, it is sufficient for discharge of service tax liability rendered by his principal. The same views were taken in the cases: - 2013 (6) TMI 490 - CESTAT MUMBAI - 2012 (12) TMI 579 - CESTAT AHMEDABAD =================