Cenvat credit adjustment of Service Tax.

[Samik Chaudhuri]

Sir

We are manufacturing Co. Can Service Tax payable amount for Inward/Outward Transportation, Security Service and Work Contract service be adjusted with Service Tax Cenvat credit ? Please suggest me.

With thanks and regards

Samik Chaudhuri.

[PAWAN KUMAR]

Dear Sir,

Service tax payable under reverse charge mechanism (Whether partial or full) is required to be deposited through Cash. please read the explanation inserted from 01.07.2012 after rule 3(4) for the same.

AI Summary

Reverse charge liability for services must be discharged in cash, not adjusted against Cenvat credit.
Service tax payable under the reverse charge mechanism for inward/outward transportation, security services and work contract services must be paid in cash and cannot be adjusted against Cenvat credit, pursuant to the explanation inserted in the relevant rule that mandates cash deposit for reverse charge liabilities.