Input service credit - Reg.

[vinay wakde]

We are receiving monetary consideration for following activities and we are paying service Tax under reverse charge method.

(1)Penalty imposed on supplier for late supply of material.

(2)Amount recovered from the contractor for delay or non completion of work beyond an agreed date.

(3)Amount recovered by the employer from employee for failure to comply with contracted conditions i.e. recovery of notice pay.

(4) Penalty and Fines collected by the company for maintenance of building & structures. 

Kindly let us know whether we shall claim CENVAT on above Input services received by us after making e-payment under reverse charge method.

Regards,

VINAY

AI Summary

Can CENVAT Credit Be Claimed on Service Tax Paid via Reverse Charge for Penalties and Recoveries? A query was raised regarding the applicability of claiming CENVAT credit on service tax paid under the reverse charge method for various monetary recoveries. These include penalties imposed on suppliers for late material delivery, amounts recovered from contractors for project delays, employee notice pay recoveries, and fines for building maintenance. The response questioned the need to pay service tax on penalties under reverse charge, suggesting that compensation might be liable only if it qualifies under reverse charge provisions.