CENVAT CREDIT

[Gopalarathnam Muralidharan]

Facts of the issue:

1) Prior to 1.7.12, a client was under works contract (compounding scheme)

2) Did not avail on any cenvat credit on input services and on capital goods

3) Departmental audit and CERA audit also completed upto 31.3.12

4) The client was executing both taxable and exempted services during that period

5) Post 1.7.12, the client follows actual labour charges and actual material under Works contract service for the contract entered afresh.

Querry

1) Can we avail cenvat credit for the period relating to 2009-10 to 2011-12 for which Departmental audit and CERA audits were over

2) what are the possible problems that may arise by availing CENVAT Credit now

[YAGAY andSUN]

Dear Gopal,

You must availed the Income Tax Benefits on the gross amount  of the expenses.  If you avail the CENVAT credit then you would have to reverse the IT benefits which would not be possible now as you must filed the IT returns etc.

Regards,

Team YAGAY & SUN

(Indirect Tax Consultants)

AI Summary

Cenvat credit: retroactive claim may require reversing income tax deductions, potentially precluding recovery after prior filings. Claiming Cenvat credit for an earlier period when the taxpayer did not avail credit and audits were completed would necessitate reversing income-tax benefits previously taken on gross expenses; because income-tax returns and filings are already complete, such reversal may not be feasible, creating compliance and administrative impediments to a retrospective Cenvat claim.