cenvat credit

[Dalia Felix]

Sirs,

1. Service tax was paid by the service provider after getting demand notice from the Department. After making payment, they claimed re-imbursement of service tax from the service receiver company by issuing a 'supplementary invoice'. what do you think on the eligibility of CENVAT Credit (on this input service) to the service receiver company (based on rule 9 of CCR 2004)?

2. will the situation change if no SCN was issued on the service provider; only an O.C was served?

thanks and regards.

 

[Vaidyanathan Venkat Raman]

Cenvat credit can be availed on supplementary bills except when such amount has become recoverable from the provider of service on account of non-levy or non-payment or short-levy or short-payment by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Finance Act or of the rules made thereunder with the intent to evade payment of service tax (Refer Rule 9(1)(bb) of CCR 2004. 

 

As such, if no SCNs have been issued but only a letter has been served by the department without any allegation, then Service tax credit can be availed.

Regards,

V.Venkat Raman

[Guest]

If SCN  is issued with allegation of suppression with an intent to evade duty ( which will definitely be there) with equal penalty then in such a case credit will not  be available to the recipient of the service on raising of supplementary bills.

However if there is no SCN and no allegation, but just a letter ten CREDIT will be available to the service receiver against supplementary bills.

[Madhukar N Hiregange]

The charge of suppression and intention to evade is a serious allegation. The mere dispute cannot lead to denial of credit.

In case of denial at stage 1. Then the receiver can await the resolution and in case the decision finally comes to a conclusion that only the normal period can be invoked, then the credit cannot be denied.

It maybe remembered that there is no time limit to avail the admissible credit. 

[Guest]

Most of the time the SCN has allegation of suppression with an intent to evade duty as a base in such event credit will not be available to the receiver.

It is also true that none of the adjudicating officers take decision even if the issue is in favor of the assessee and even if done the department will go in appeal so the ball keeps rolling for a very long time. So to wait for the matter to conclude finally thru judicial process may take years and waiting may be waste of time.

 

AI Summary

CENVAT credit eligibility on supplementary invoices depends on absence of suppression allegations; alleged evasion bars credit. CENVAT credit on supplementary invoices is generally available to the service recipient except where the amount is recoverable due to non levy, non payment or short levy caused by fraud, collusion, wilful mis statement or suppression of facts indicating intent to evade service tax. If the department issues only a communication without allegations the recipient may claim credit; if a show cause notice alleges suppression with intent to evade, credit is normally disallowed. Admissible credit is not subject to a time limit, though adjudication and appeals may delay final resolution.