Input tax credit on service tax bills

[jagadesh kumar bhojanapalli Kumar]

The 100% EOU company had received invoice date is 23.08.2014 for taking credit is 6months time bar so we can take credit in this month or not any reversal is to be made or not since we have not made payment to service provider

[YAGAY and SUN]

Dear Jagadesh,

You may take CENVAT credit within time limit of 6 months and make payment within 3 months from the date of taking CENVAT credit. In case of non payment or non compliance then you would have to reverse the CENVAT credit.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[jagadesh kumar bhojanapalli Kumar]

Thank Youand could you confirm me whether after making payment to service provider shall we take re-creditand confirm

[YAGAY and SUN]

Dear Sir,

You can avail the CENVAT credit after making the payment but within the period of Six months. Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultant)

[Mahir S]

Yes, you can avail re-credit after making payment to service provider, as per the details explained above.

[jagadesh kumar bhojanapalli Kumar]

We have little bit confusion further pl. clarify the following :We shall take credit by before 22nd Feb., 2015 that means with in 6months .Service Provider had already paid service tax component to Govt.Suppose Company doesn't make payment with in 3months i.e., from 23.2.2015 to 22.5.2015 we shold reverse the same. Finally when we makes payment to service provider , we will take re-credit . It is Ok (Notifn.No.21/2014-CE(NT) dtd,11.07.2014and Circular No.990/14/2014-CX-8 - does not speak for re-credit) regards,

[YAGAY and SUN]

Dear Jagadesh,

Yes, law is silent on this matter. You may get the clarification from the Jurisdictional Commissioner or CBEandC or TRU in this regard.

Regards

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Ramanujam Varadarajan]

Credit can be availed within 6 months of invoice date. Payment to service provider ought to have been made within 3 months from the date of invoice. Credit taken immediately on receipt of invoice should be reversed if payment is not made within 3 months. Re-credit is permissible after the payment and time limit of 6 months is not applicable for re-credits.

AI Summary

Input tax credit: claim within prescribed period; non payment to service provider requires reversal, recredit after payment may follow.
CENVAT credit on service tax invoices must be availed within the prescribed claim period from invoice date; credit subject to a payment within period condition must be reversed if payment to the service provider is not made within the payment window. Re credit after making payment is treated as permissible by practitioners, though administrative guidance is silent and taxpayers should seek confirmation from the competent authority regarding re credit timing and applicability of the original claim period.