My friend has two service tax registered firm. One is partnership firm in which he is one of the three partners and another one is his own proprietorship firm. By mistake, the Service Tax liability of former firm has been paid into later one. I need your guidance as to whether there is any provision in the Service Tax Rules which permits to adjust the payment made to one firm where there are no liabilities to another firm where actual liabilities arose or he has to go for lodging refund claim before the Service Tax Department. Also, remember both the firms are registered with Service Tax Department.
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Both the firms have separate legal entities. Separate PAN and separate Service Tax Registration Number.No such provision for adjustment.Only option is to apply for refund. Deposit Service Tax immediately without waiting for refund. Refund may take time. Interest will have to be deposited for the delay which is increasing day by day.
There may be case laws on the issue in your favour but note that the department shall not agree to adjustment.
I fully agree with Sri Kasturi Sir 's review.