CENVET CREDIT ON THE BASIS OF REIMBURMENT INVOICE

[hardik thacker]

SIR,

I AM WORKING IN ON THE GOVT. ORGANISATION

IN OUR ORGANIZATION ALL WORKS CONTRACT ARE CONTAINS THE CLAUSE THAT 'THE SERVICE TAX WILL REIMBURSE TO SERVICE PROVIDER ONLY ON PRODUCING PROOF OF PAYMENT OF SERVICE TAX.'

E.G ONE PARTY HAS RAISED FIVE INVOICE WITH SERVICE TAX IN DIFFERENT TIME OF THE YEAR.

HOWEVER OUR ORGANIZATION WILL PAY ONLY SERVICE VALUE AT THAT TIME

NOW FOR CLAIMING SERVICE TAX THE SAME PARTY WILL ISSUE 'SEPARATE CLAIM' WITH PROOF OF PAYMENT OF THE SAME.

AT THE TIME OF REIMBURSEMENT OF SERVICE TAX THE TIME LIMIT OF ONE YEAR HAS BEEN ALREADY ELAPSED.

MY QUERY IS THAT, WHETHER CENVAT CREDIT CAN BE TAKEN ON THE BASIS OF SUCH 'SEPARATE CLAIM'

[KASTURI SETHI]

Yes. Cenvat credit of Service Tax can be taken. There are two basic parameters. These are:-

Service Tax should be paid on input service and it can be utilised only for payment of taxable output service or dutiable excisable goods. No doubt such "SEPARATE CLAIM" is not prescribed document for taking credit but as per definition of "gross amount charged" in Explanation (c) to Section 67 of the Finance Act, 1994 (Below Para no.4) mode of payment of Service Tax is valid as per law. Payment of ST through reimbursement by way of separate claim is valid and credit can be taken.

[hardik thacker]

Thank you very much sir,

I was in confusion since long..

Thank you.

AI Summary

Eligibility for CENVAT Credit Confirmed for Reimbursed Service Tax Beyond One-Year Limit, Valid Under Finance Act, 1994. An individual from a government organization inquired about the eligibility to claim CENVAT credit based on a 'separate claim' for reimbursed service tax payments, as the reimbursement process exceeded the one-year time limit. A respondent confirmed that CENVAT credit can indeed be taken under these circumstances. They explained that while a 'separate claim' is not a prescribed document, the payment method is valid under the Finance Act, 1994, allowing credit for service tax paid on input services used for taxable output services or excisable goods. The inquirer expressed gratitude for the clarification.