Service Tax

[Gopal B]

Dear Sir,

We r  getting security services and provider collecting 25 percent from us and paying the Dept.and balance 75 percent paid by us to the Dept.. Now  my question is shall we claim credit of total 100 percent or only 75 percent ? Pls clarify. 

Thanks

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

You can avail CENVAT credit for both.  But for the credit for the reverse charge ( i.e., 75 percent ) can be availed only after making payment to the Department.

Regards,

M. Govindarajan

[SHIVKUMAR SHARMA]

Dear Mr.Rao

 You can Avail 100 percent Credit  of service tax paid on Security service(25 percent on the bill of Security Agency & 75 percent on the basis of GAR-7 Challan)

Shivkumar Sharma

[Sanjeet Kumar]

Yes u can.

but Some exception are there.

[Gopal B]

Dear Sir,

What r the exception?

[Sanjeet Kumar]

I dont think exception are applicable in your case. still for your information 

In General, If your Output service is exempted from tax in this case you cant get the input of the service. 

if your input service is not in relation with the output service in that case you again are not entitled for the input credit.

So yes you can get the Input on 75 percent on basis of Invoice,25 percent on basis of Challan

Note: you have to deposit 25 percent first, you cant adjust your input against this amount of 25 percent .

[thotthing ruivah]

Dear Mr  MARIAPPAN GOVINDARAJAN 

In your post dated 24-01-2014 you have stated that

"the credit for the reverse charge (i.e., 75 percent) can be availed only after making payment to the Department.". Kindly specify the Law (Rules, Notification, circular, instruction etc.) for this provision. Also if the input service credit is availed & utilised before making payment to the Department, what are the consequences.

AI Summary

Input Service Credit: both provider-collected and reverse-charge components allowed, but reverse-charge credit only after payment to revenue.
Credit may be claimed for both the provider-collected portion and the reverse-charge portion of service tax on security services, but credit for the reverse-charge component can only be availed after the recipient makes the required payment to the revenue authority. Exceptions bar credit where the recipient's output services are exempt or where the input service is not related to the taxable output. The provider-collected portion must be deposited and cannot be adjusted against the recipient's input credit; availing reverse-charge credit prior to payment may attract consequences.