TIME LIMIT FOR CENVAT CREDIT UNDER RCM

[Ramachandran Chandru]

Per CENVAT Rule 2004, time limit for taking credit is one year from the the date on which the Invoice is received from the Supplier. Whether this one year time limit for taking CENVAT credit is applicable for tax paid under reverse charge mechanism also.

[DR.MARIAPPAN GOVINDARAJAN]

There is no specific rule for taking credit for taking CENVAT credit in respect of RCM but some authorities are of the view that it should be one year from the date of invoice. My view is no invoice is raised for RCM and as such the Rule of limitation will not applicable to RCM.

[Ganeshan Kalyani]

In my view the one year criteria in case of reverse charge would be from the date of payment of service tax.

[CSSANJAY MALHOTRA]

Rule 4(7) of CCR 2004 is self explanatory as the same specifies the period of 1 year for the purpose of availment of CENVAT Credit in respect of any of the document issues under Rule 9. In case of reverse charge, CENVAT Credit is admissible on the basis of TR-6 challan as and when the tax is paid.

Hence, period of 1 year commences from the date of payment of Tax under reverse charge. Furthermore, where the Service Tax has been paid under reverse charge and CENVAT Credit has been availed within a period of 3 months from issue of invoice date, but the payment has not been made within 3 months, CENVAT Credit needs to be reversed or paid back. The same may be reclaimed when the payment has been made to supplier and henceforth period of 1 year limitation does not apply.

 

[Suryanarayana Sathineni]

I concur with the views expressed by the experts in Sl. Nos. 2 & 3 of the response to thequery.

Best Regards

Suryanarayana

[YAGAY and SUN]

Agreed with the replies of learned friends.

[Ramachandran Chandru]

Are we eligible to take credit of tax paid under RCM when the payment for service provider is not paid.

[DR.MARIAPPAN GOVINDARAJAN]

When the service tax under RCM is paid, in my view, credit may be taken even though the bill amount is not paid to the service provider.

AI Summary

Cenvat credit under reverse charge: entitlement tied to tax payment, with reversal required if RCM tax remains unpaid.
The one year limitation for availing CENVAT credit under reverse charge is best measured from the date the tax is paid under RCM, with admissibility evidenced by the TR 6 challan; credit taken before payment must be reversed and may be reclaimed upon subsequent payment to the tax authorities or supplier.