Service Tax Reverse Charge

[Abdul Razack Basha]

Dear Sir,

We are running EOU unit manufacturing Electronic Coils and Transformers at Chennai.

We need following clarification from you. Please do the needful.

1.We are having surplus credit in our book, please advise can we adjust this credit against the service tax payable as Recipient.

2. Can we get refund of this excess credit (Both Excise and Service Tax) from central Excise department.

Regards

Abdulrazack Basha 

9941901251

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

The service tax in reverse charge mechanism is to be discharged only by cash payment not by adjusting the CENVAT credit.

You can get the refund as per the provisions in CENVAT Credit Rules, 2004.

Regards,

M. Govindarajan

[Guest]

1. Service Tax liability arising under Reverse Charge cannot be paid by utilising balance in Cenvat Credit.

2. Refund can be claimed for input and input services which are used in the manufacture of excisable goods exported from India.

[Abdul Razack Basha]

Thank you

AI Summary

Reverse charge service tax cannot be paid using CENVAT credit; refund rules allow credit recovery for exported inputs. Liabilities under the reverse charge mechanism must be discharged by cash and cannot be adjusted against accumulated CENVAT credit; CENVAT credit for inputs and input services used in manufacture of excisable goods for export may be claimed as refund under the CENVAT Credit Rules, subject to prescribed conditions and procedures.