Reverse Charge

[Guest]

Can we avial tax credit in case of Reverse charge and if tax credit is not availed can the refund be claimed ??

If the refund can be claimed, what is the procedure ??

[KASTURI SETHI]

Sh.Prashant Premlani Ji,

Under RCM, the recipient of service will pay ST by way of GAR-7 challan. Such challan is eligible for availing cenvat credit under Rule 9(1) (e) of Cenvat Credit Rules, 2004.

[Guest]

Thanks Kasturi Sethi Sir for your valueable advice

I also wanted to know that if the credit is not availed, can we claim refund ? If yes , under which section ??

[KASTURI SETHI]

No provision for refund.

[CSSANJAY MALHOTRA]

Dear Mr. Prashant,

Validate the facts placed by Sh. Kasturi ji.

You are eligible for refund in case of Exports only either under Rule 5 of CCR 2004 and Notification No. 41/2012-ST. In case of refund under Rule 5 of CCR, you have to avail the Input Credit initially.

[KASTURI SETHI]

SH.CS SANJAY MALHOTRA JI,

YES SIR. I agree with you. In case of export, the party is eligible for refund as advised by you. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

As indicated by my professional colleagues since your service does not amount to export of services, refund will not be eligible and you can avail credit for the same.

[Ganeshan Kalyani]

The cenvat credit of swachh bharat cess is not yet allowed by the Gvt and therefore there is no question of applying for refund. Thanks.

[Mahir S]

Yes, sir , detailed reply on each aspect already furnished above by learned personalities, hence I endorse their views.

[Guest]

Thanks a lot Mr. Sanjay, Mr. Sethi and Mr. Govindranjan for providing your views on the topic.

AI Summary

Tax Credit Eligibility Under Reverse Charge Mechanism: Cenvat Credit Rules and Refund Conditions Explained A discussion on a forum addressed whether tax credit can be availed under the reverse charge mechanism (RCM) and if a refund is possible if the credit is not availed. Participants clarified that under RCM, the recipient pays service tax via a GAR-7 challan, eligible for cenvat credit. Refunds are generally not available unless related to exports, where Rule 5 of CCR 2004 and Notification No. 41/2012-ST apply. It was noted that for non-export services, refunds are not eligible, but credit can be availed. Additionally, cenvat credit for the Swachh Bharat cess is not allowed.