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, he may adjust such excess amount paid by him against his Service Tax liability for the succeeding month or quarter. [ Please Refer : Rule 6(4A), Service Tax Rules, 1994. ]

The Conditions for Self-adjustment of Excess amount of Service Tax paid :

(i) Excess Service Tax paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification, 

[ Please Refer : Rule 6(4B), Service Tax Rules, 1994. ]

Adjustment in case of Renting of Immovable Property :

Where the person providing Taxable service in respect of renting of immovable property [Section 65(105)(zzzz)] has paid excess amount towards Service Tax liability for a month or quarter, on account of non-availment of deduction of property Tax paid from the gross amount charged for renting of the immovable property for the said period at the time of payment of Service Tax. The assessee may adjust such excess amount paid by him against his Service Tax liability within 1(one) year from the date of payment of such property Tax. The details of adjustment shall be intimated to the Superintendent of Central Excise within a period of 15(fifteen) days from the date of such adjustment.  [ Please Refer : Notification No.24/2007-ST; Rule 6(4C), Service Tax Rules, 1994. ]

Adjustment in case if Service is not provided fully :

Where an assessee has paid Service Tax in respect of a Taxable service, which is not provided by him, either wholly or partially for any reason, the assessee may adjust the excess Service Tax so paid by him (calculated on a pro-rata basis) against his Service Tax liability for the subsequent period, only, if the assessee has refunded the value of Taxable service and the Service Tax to the person from whom it was received  [ Please Refer : Rule 6(3), Service Tax Rules, 1994. ]

In cases of excess payment, where self-adjustment is not permissible refund claims have to be filed with the Department. The refund claims would be dealt as per the provisions of Section 11B of the Central Excise Act, 1944, which is made applicable to Service Tax u/s 83 of the Finance Act, 1994. 

Any amount of Service Tax paid in excess of the actual liability, is refundable, only if it is proved that the claimant of refund had already refunded such amount to the person from whom it was received or had not collected at all from any one.

Procedure for claiming refund:

Application in the prescribed form (Form - R) is to be filed in triplicate with the jurisdictional Assistant/Deputy Commissioner of Central Excise/Service Tax.

The application should be filed within 1 year from the relevant date as prescribed in Section 11B of the Central Excise Act, 1944 which has been made applicable to Service Tax refund matters also

Application should be accompanied by documentary evidence to the effect that the amount claimed as refund is the amount actually paid by him in excess of the Service Tax due and the incidence of such Tax claimed as refund has not been passed on to any other person.

‘Relevant Date’ for filing refund claims :

The “relevant date” for the purpose of limitation period in respect of refund claim has been explained in Section 11B of the Central Excise Act, 1944 which is applicable to Service Tax is:

SITUATION	RELEVANT DATE
Generally	Date of Payment
Provisional Assessment	Date of Final Assessment
For Recipient of Service	Date of purchase of service
Rectification of Mistake	Date on which rectification order is passed
Exemption Notification	Date of Publication in the official gazette

Interest for delayed payment of refunds :

If delay in refund of Service Tax is for more than 3 months from the date of receipt of refund application, Interest is paid by the Government at the rate not below five per cent and not exceeding thirty per cent per annum. [Please Refer : Section 11BB of Central Excise Act, 1944.] 

At Present : Simple interest @ 6% p.a. is granted on delayed refunds.

  Rs. 1000 cr in tax refunds pending for service exporters

CBEC Clarifications : Refund of Service Tax paid on specified Services used for Export of Goods