Cenvat credit of service tax deposited under reverse charge machanism

[prabhu Chauhan]

Whether cenvat credit is available on the service tax deposited under reverse charge mechanism when the lapse in payment is indicated by service tax audit team But Before issue of SCN ?

This case will fall under Cenvate Rule 2004Rule 9 (1)e.

[Ganeshan Kalyani]

Sir, in my view the service tax credit in your case is eligible. Thanks.

[KASTURI SETHI]

Agreed with Sh.Ganeshan Kalyani, Sir. Credit is admissible irrespective of the situation whether before or after issuance of SCN.

[prabhu Chauhan]

THANKS FOR YOUR VALUABLE COMMENTS.

THERE COULD BE ISSUES WITH THIS AS UNDER RULE 9(1) b, and 9(1)bb the credit for the supplementary invoice raised by producer or service provider is not admissible if there is fraud, misrepresenation or suppression of facts.

(though this condition not extended to cluase 9(1)e).

REGARDS

[Ganeshan Kalyani]

Even in that situation the credit is eligible. This is my view.

Sir Kasturi Sir request your opinion on this. Thanks.

[KASTURI SETHI]

Sh.Prabhu Chauhan Ji,

I concur with views dated 23.6.2016 of Sh.Ganeshan Kalyani, Sir. Why and how I concur with his views ? I clarify as under :-

1. The querist (Sh.Chauhan Ji) is intermingling the activity of Service Provider with the Service Receiver. Service Receiver cannot be penalised in any way because of offence committed by S.P. Both are independently responsible for each activity while providing service or receiving service.

2.Service Receiver cannot be denied credit on the strength of challan evidencing payment of Service Tax on taxable service in the situations mentioned by Sh.Chauhan i.e. Rule 9(1)b and Rule 9(1)bb of Cenvat Credit Rules,2004.

3. Sh.Chauhan is draggingRule 9(1)b and Rule 9(1)bb into Rule 9(1)e which is not allowed or provided by any stretch of imagination.

I have expressed my views on the request of Sh.Ganeshan Kalyani, Sir. It is my duty to convince Sh.Chauhan also. I hope he would not mind my expression. Whether the querist agrees with me or not, it is his option ?

 

 

[Ganeshan Kalyani]

Sir, thanks for sharing your valuable views. In fact I learn a lot from your replies. It enriches my knowledge. Thanks.

[prabhu Chauhan]

[KASTURI SETHI]

Sh.Prabhu Chawla Ji,

Thanks. This is your sportsman spirit. I am all praise for you.

[KASTURI SETHI]

Sorry. Name mentioned wrongly. Read as 'Sh.Chauhan' in place of 'Chawala'.

[Manoj Agarwal]

If the service on which the recipient has paid service tax under Reverse Charge is otherwise eligible as 'input service' then the Cenvat Credit can be availed by him on the strength of payment challan.

[Guest]

Manoj Sir

Eighter it can be avail UNDER RCM ???

AI Summary

Cenvat credit availability for reverse-charge service tax: recipient may claim credit based on payment challan despite supplier irregularities. Cenvat credit is available to a service recipient for service tax paid under the reverse charge mechanism where the recipient has paid the tax and possesses the payment challan; entitlement depends on the recipient's payment and documentary proof rather than on the issuance of a show cause notice, and supplier fraud or misrepresentation provisions do not automatically deny the recipient's credit when the recipient has independently paid.