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Credit Note Adjustments on Service Tax Component

Not all credit notes qualify for an adjustment in the SST-02 return. Credit note adjustments are only allowed for credit notes that are issued in the “normal course of business”. The issuance of a credit note to correct an over-charge or erroneous charge of service tax does not constitute as adjustment made in the course of business.  Where a company has overcharged or erroneously charged service tax to its customers and wishes to correct this error, the recourse available to the company is to apply for a service tax refund pursuant to Section 38 of STA.

Source: Deloitte

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