Distinction in Excise and Service tax payment mechanism
THIS issue also brings out different methodologies adopted in the realm of excise and service tax. Manufacturers who are registered with excise authorities do not have the facility to pay excise duty on the basis of payments received from their buyers. Instead they are liable to pay duty on the invoice value.
The only concession provided to them is deferring the payment of duty to the 5th of the following month by virtue of Rule 8 of Central Excise Rules, 2002. The manufacturers cannot write off the amounts not received from their buyers and they end up paying excise duty on the entire invoice value.
Further, if assessees in central excise receive lesser amounts from their buyers than what is mentioned in the invoice and if they have paid excess duty, then to claim refund of that excess duty, they are subjected to the rigours of Section 11B of Central Excise Act, 1994. On the contrary, service tax assessees are fortunate in that respect, because they are liable to pay tax only on the amount received from their clients. If they still end up paying higher tax, they have the option of adjusting the higher payments in terms of Rule 6(4) to Rule 6(4C) of Service Tax Rules, 1994 subject to the conditions prescribed therein.