CENVAT CREDIT

[Rajeev Verma]

SIR I AM WORKING IN LIMITED COMPANY AND IN MY COMPANY HAVING NO OUT PUT SERVICE BUT PAYING SERVICE TAX UNDER REVERSE CHARGES MECHANISM AND OTHER INPUT SERVICES . WHETHER I CAN UTILIZE THE CENVAT PAID ON OTHER INPUT SERVICES AGAINST PAYMENT UNDER REVERSE CHARGES MECHANISM.

[JSW CEMENTLIMITED]

Kindly clarify the status of your company whether it is a manufacturer or not. If its a manufacturer, then you can avail cenvat credit of service tax on input service and utilize it for payment of excise duty. If you are a trader company, the no service tax credit will be available.

[Ganeshan Kalyani]

Sir, No you cannot pay liability of service tax under reverse charge mechanism through CENVAT Credit. Service tax under RCM is to be paid in Cash. Thanks.

[JSW CEMENTLIMITED]

Yes service tax on reverse charge has to be paid in cash only.

[CA AJAY KUMAR AGRAWAL]

I would like to add something. Inspite of the fact that the assessee is a manufacturing company, it cant use Cenvat Credit (of ST paid under RCM) on Works Contract Service, Motor Cabs etc.

[JSW CEMENTLIMITED]

Sir,

As u said, Service tax cannot be availed on rent-a-cab but in case of works contract, if the same pertains to repair or maintenance of office building or factory building, machineries etc. the service tax credit can be availed.

[Venkataprasad Pasupuleti]

Yes agreed with above views - ST liability under RCM shall be paid in cash.

AI Summary

Cenvat credit cannot discharge reverse charge service tax liability; RCM payments must be made in cash. Service tax payable under the reverse charge mechanism must be paid in cash and cannot be discharged using cenvat credit; manufacturers may avail cenvat credit on input services and utilize it against excise duty on output goods, whereas traders cannot claim such credit. Certain services (for example rent-a-cab) are ineligible for credit, while works-contract services related to repair or maintenance of factory/office assets may qualify for credit.