Tax not paid in Service tax_where to pay and whether ITC available

[Yatin Bhopi]

Dear expert

While reconciling (2016-17 upto June 17) our books with Service tax returns, we found that in some cases we have not paid Service tax on import of services. my queries are:

1. Whether service tax payable under service tax head or we can pay GST

2. Whether ITC available to us

Need urgent advice

[YAGAY and SUN]

You need to pay pending service tax in cash but no ITC/CENVAT credit would be available to you.

[KASTURI SETHI]

Deposit of ST online is also available. No ITC available as opined by M/s.YAGAY and SUN, Sirs.

[Rajagopalan Ranganathan]

Sir,

As per Section 142 (8) (a) of CGST Act, 2017 " where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.

Therefore service tax if not paid under the existing law is recoverable under CGST Act as arrear of tax under CGST Act and the amount so recovered shall not be admissible as input ta credit under CGST Act.

[Alkesh Jani]

Sir, I agree with Sh. Rajagopalan sir It shall be paid under GST head "OTHERS".

Thanks

[DR.MARIAPPAN GOVINDARAJAN]

You have to pay the service tax along with interest at the applicable rate and you cannot avail CENVAT credit.

[Yatin Bhopi]

Thanks a lot for clarifications.

Unfortunately no ITC is available under GST even though payment was under RCM, this is going to be cost to us.

Is there any way (Since amount involved is huge). If there is no GST, ITC was available

[KASTURI SETHI]

If the amount is huge, throw the ball in the court. 'Time factor' may help you. Do not surrender without fighting. Expert Advocate/Consultant/CA can resolve your problem on the ground of "time factor".

[Alkesh Jani]

Sir,

In terms of Section 17(5)(i) of CGST Act,2017, ITC is not available only in case any tax has been paid in accordance with the provisions of Section 74, 129 and 130. As you have not paid tax in accordance with the above provisions, ITC may be available. Please consult the experts and do the needful. Hope for the best.

Thanks

[KASTURI SETHI]

Anyhow, it is a hard nut to crack but efforts must be made. Only route is through litigation.

[Yatin Bhopi]

Thanks all, for your valuable feedback. We are consulting this issue with our consultant

AI Summary

Input tax credit uncertain where prior service tax was unpaid; payment must be made and ITC may be disallowed.
Outstanding service tax on imported services should be paid (with interest) as tax arrears; deposits can be made online. Amounts recovered under assessments or as arrears under the GST recovery regime are not admissible as Input Tax Credit. Some advisors contend limited factual or procedural challenges, including litigation and timing arguments, may be pursued, but the prevailing position is that CENVAT/ITC will generally not be available when recovery is effected under the post enactment arrears mechanism.