Service receiver paid service tax to provider but he has not paid to goverment

[Asked by Guest]

Dear Sir,

We are paid an invoice value with service tax to service provider. But service provider will not paid service tax to service tax department.

In this case we can take a service tax credit or not??

Please explain.

Thanks & Regards,

Sanjay Vasava

[Mahir S]

Sir,

Please refer sub rule (7) of rule 4 of Cenvat Credit Rules, 2004 , which is self explanatory.

[Ganeshan Kalyani]

If you have paid the tax to the service provider then you are eligible to tax credit based on invoice.

[DR.MARIAPPAN GOVINDARAJAN]

You can take credit on the service tax irrespective of the fact whether the service provider pays the service tax with the department or not. But this position will be in the reverse in the GST regime.

[Ganeshan Kalyani]

Only when supplier pays the tax the recipient will be able to take the credit .

[YAGAY and SUN]

Collecting Service tax from the service receiver but not paying to the Government is an offence. However, you can avail the CENVAT credit.

AI Summary

Input tax credit entitlement: recipients may claim Cenvat credit based on invoice/payment despite supplier non remittance, with caveats.
Whether a recipient may avail Cenvat credit when the service provider collects service tax but does not remit it: respondents variously advise that credit is available based on invoice and payment (citing sub rule (7) of rule 4, Cenvat Credit Rules, 2004), others contend credit depends on the supplier's actual payment to government, and one notes supplier non remittance is an offence while another warns the position will change under GST.