Where an assessee has paid service tax to the Central Government in respect of taxable service not provided by him, for any reason, the assessee may adjust the excess service tax so paid by him calculated on a pro rata basis against the 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. (up to 1.4.2011)

W.e.f. 1.4.2011. it has also been provided that when an invoice has been issued or a payment received for a service which is not subsequently provided, the assessee may take the credit of the service tax earlier paid when the amount has been refunded by him to the recipient or by the issue of credit note, as the case may be.

In CCE, Jaipur v. Vinayak Agrotech Ltd. 2012 (5) TMI 524 - CESTAT, NEW DELHI, where assessee was liable to pay duty and same was collected from customers and realization of that duty was not required to be paid due to eligibility of SSI exemption and assessee returned the duty so collected to customers by way of credit notes, it was held that assessee in such a case did not collect any duty from customers representing it as excess duty. Therefore, that amount was not liable to be recovered under Section 11Bof Central Excise Act, 1944. Hence, it was held that unjust enrichment was not applicable.

In CCE, Vadodara v. Apollo Tyres Ltd. 2012 (12) TMI 798 - CESTAT AHMEDABAD, where by mistake, duty was discharged in excess and seller has issued credit note to buyer for such excess duty, it was held that it could be said that burden of duty was not passed to any other person. Hence, seller could claim refund of such excess duty.

Rule 6(4A)

Where an assessee has paid excess service tax for a month or quarter, the assessee may adjust such excess in the subsequent month or quarter subject to the following conditions:

1. It is not due to interpretation of law, classification (omitted w.e.f. 1-7-2012), valuation and applicability of exemption notification.
2. An assessee registered under rule 4(2) on account of delayed receipt may adjust without monetary limit.
3. Other than the above, maximum of Rs. one lakh can be adjusted in a month or quarter and intimated to jurisdictional central excise officer. (w.e.f. 1.4.2011, Rs. Two lakh) w.e.f. 1-4-2012, unlimited amounts of permissible adjustments shall be allowed subject to Rule 6(4B).

Rule 6(1)

Service tax is payable on value of taxable services received. If no payments are received, there is no need to pay service tax. However, with Point of Taxation Rules, 2011 w.e.f. 1-4-2011, Service Tax shall be payable on accrual basis.