ELGIBILITY OF CENVAT FOR SERVICE TAX PAID UNDER RCM

[Ramachandran Chandru]

Would like to know whether CENVAT credit is eligible for service tax paid under RCM category. If so, is there any time bar for taking credit of tax paid, like one year period applicable for Non-RCM category. Also, any time bar is applicable for payment of service tax under RCM category. In the event of service tax paid, without interest, after due date, whether credit can be taken for the same under RCM. Please clarify.

[DR.MARIAPPAN GOVINDARAJAN]

1. CENVAT credit is eligible for service tax paid under RCM category. The Credit may be taken only after making the payment to the exchequer of the Government.

2. In my view there is no such time limit but many opined that one year time limit is applicable.

3. The payment under RCM is payable on 5th or 6th of the following month.

4. In my view the CENVAT credit can be taken after payment of service tax under RCM. Non payment of interest is no bar but action will be taken by the department for non payment of interest.

[Himansu Sekhar]

1. The credit can be availed on the service tax paid on RCM category

2. As per Rule 4(7) (fifth proviso) of the CCR,2004, the one year is applicable for the availment of credit. Because Challan is also a document under Rule 9 of the CCR 04.

3. Please refer to the clarification of CBEC vide Circular No: 990/14/2014-CX-8 dated. November 19, 2014.

[Himansu Sekhar]

There is no bar on taking credit if the tax is paid without interest

[Ganeshan Kalyani]

I agree with the views of the experts.

AI Summary

CENVAT credit for RCM-paid service tax allowed after government payment; time-limit contested, payment timing and interest issues noted. CENVAT credit is available for service tax paid under the reverse charge mechanism only after actual payment to the government. There is a split on temporal limitation: some reject a time bar while others rely on time bar provisions and treat the challan as a qualifying document, supporting a one year limitation as per administrative guidance. RCM tax must be paid by the prescribed monthly due date, and payment without interest does not automatically bar credit though interest non payment may invite departmental action.