Cenvat credit on outdoor catering services received before 1-4-2011 remains available despite later payment.

Cenvat credit of service tax on outdoor catering services received before 1-4-2011 was admissible where the services were completed in March 2011 and the invoice or challan had been issued before that date, even if payment was made later. Rule 4(7) of the Cenvat Credit Rules, 2004, as amended, allowed availment of credit on payment of the value of the input service in such cases. The Board circular also clarified that credit remained available for services completed before 1-4-2011 notwithstanding later payment. The demand was therefore not sustainable.

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Issues: Whether Cenvat credit of service tax on outdoor catering services received before 1-4-2011 but paid for after that date was admissible.

Analysis: The credit was claimed in respect of services admittedly received in March 2011, when outdoor catering remained within the definition of input service. Rule 4(7) of the Cenvat Credit Rules, 2004, as amended, permitted availment of credit on payment of the value of input service where the invoice or challan had been issued before 1-4-2011. The Board circular clarified that credit would be available where the services were completed before 1-4-2011, even if payment was made thereafter.

Conclusion: The credit was admissible and the demand could not be sustained.

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