what is the impact if we credit taken Before Invocie

[Guest]

Dear Sir,

By mistake in Service tax Credit taken date is before the invoice service provider invoice date.

Is there any litigation regarding this ?

Regards

swapneswar Muduli

[Rajagopalan Ranganathan]

Sir,

How do you know the amount of service tax paid by your service provider before receipt of his invoice? If you have taken the credit before the date of invoice it will become wrong credit and the same is to be paid back with interest. If you reversed the wrong credit within the same month in which such wrong credit is taken by you then no interest is payable. For example if the take the wrong credit on 9.3 and reverse the same on or before 31.3 then no interest is payable.

[KASTURI SETHI]

I agree with Sh.Rajagopalan Ranganathan, Sir. It is hypothetical question. Detected by Sh. Ranganathan Sir by way of asking question firstly.No logic of asking such query.

[Ganeshan Kalyani]

In am guessing: the invoice would have received first, based in which credit would have been taken. Later some error would have occurred in the invoice which the service provider would have given by revising the invoice. But only mistake had happened is invoice date is changed which should have been kept the original date. Hence this error occurred. Now, Sri Swapneswar Ji can only narrate the exact background. Further, I agree with the views submitted by Sri Rajagopalan Sir and Sri Kasturi Sir. Thanks.

[Guest]

Dear,

This is actually clerical mistake when we part-II Service tax credit we taken credit on monthly basis so this invoice date is 22-04-2015 but mistake we taken this invoice credit on 16-04-2015. We taken this invoice in our Part-II Credit Register Before this invoice date.

In this case what is the implication in cenvat credit.

Regards

Swapneswar

[KASTURI SETHI]

Again bizarre incident/ clarification.

[KASTURI SETHI]

Procedural lapse. Deposit interest involved. Possibility of issuance SCN cannot be ruled out, if detected by auditors or Range Officer.

[Ganeshan Kalyani]

I agree with the views submitted by Sri Kasturi Sir. It will amount to intention wrong credit taken. If you take corrective action now, then only interest is liable to be paid. But if the fact is found out by Excise Auditor then penalty may also have to be paid. Thanks.

[Mahir S]

Sir,

As duty is to be debited at the end of the month by totalling and utilisng the cenvat credit of the whole month, therefore it is immaterial if credit is shown taken as on 16th instead of 22nd, so long as it is taken in the same month before end of the month..

You may put a note at the end of the page regarding the clerical mistake.

[KASTURI SETHI]

If the assessee detects his mistake and rectifies on his own i.e. before pointing out by the department, the department takes lenient view.

AI Summary

Wrong credit taken before invoice date triggers repayment with interest unless reversed within same month; penalty risk if detected. Crediting service tax/CENVAT before the supplier's invoice date constitutes a wrong credit that must be repaid and attracts interest from the date taken; reversal within the same month generally avoids interest. Such entries are treated as procedural lapses arising from misdating or premature register entry. If the department detects the error, a show cause notice and penalties may follow, but authorities commonly take a lenient view where the assessee self detects and rectifies the mistake before departmental discovery.