eligibility of service tax credit

[Ramakrishnan Seshadri]

Dear Sir,

We had a doubt relating to the eligibility of service tax credit. We are the manufacturers of automobile parts.

We receive service tax paid invoices on services like manpower,clearing & forwarding and some other services. Our question is whether we can take service tax credit on receipt of the invoice and booked in the system or we have to wait till the payment is made for the invoices. we are still in confusion. some say only after payment service tax credit is eligible. Not at the time of booking the invoices .

Experts please clarify our doubt

Thanks & Regard,

S.Ramakrishnan

.

AI Summary

Service tax credit: allowed on receipt of invoice but reversed if payment not made within prescribed period.
CENVAT credit for input services is allowed on or after receipt of the invoice, bill or challan; if payment for the service and tax shown on the invoice is not made within the prescribed short period, the credit taken must be repaid (except tax paid as recipient), though it can be re availed if payment is subsequently made. Reverse charge service tax credit is allowable only after tax is paid to government. Refunds or credit notes necessitate reversal of corresponding CENVAT credit. A statutory time bar limits credit claiming after one year from the document date, and prescribed monthly timelines govern discharge and recovery of amounts under the rule.