Section 35
Claim for refund of service tax in relation to bad debt
(a)
the whole or any part of the service tax payable to such person has been written off in his accounts as bad debts; and
(b)
the Director General is satisfied that all reasonable efforts have been made by such person to recover the service tax.
(2)
Where the person who makes a claim for a refund under subsection (1) in relation to a bad debt—
(a)
has not received any payment in respect of the provision of taxable services, such person may make a claim for a refund of the whole of the service tax paid; or
(b)
has received any payment in respect of the provision of taxable services, such person may make a claim for the difference between the service tax paid and amount calculated in accordance with the following formula:
Service Tax 55
A x C
B where A is the payment received in respect of the provision of such taxable services;
B is the value of such taxable services plus service tax payable on such taxable services; and
C is the service tax payable on such taxable services.
(3)
The person referred to in subsection (1) may make a claim for a refund of the whole or any part of any service tax in relation to the bad debt within six years from the date the service tax is paid by him and the Director General may refund the whole or any part of the service tax after being satisfied that the person has properly established the claim.
(4)
For the purposes of this section, “bad debt” means the outstanding amount of the payment in respect of the provision of taxable services including the service tax which is due to a person who is, or has ceased to be, a registered person but has not been paid to, and is irrecoverable by, the person.
(5)
This section shall not apply to a foreign registered person.