REVERSAL OF SERVICE TAX PAID ON RCM BASIS

[MOHAN PANDEY]

Dear Sir

Our Company provide Freight & Forwarding & Transportation Service to the Various Customers

1. Company hire transporter form the market and paid Freight Charges to the Transporter and Paid the Service Tax - Reverse Charges Basis as per Service Tax law.

2. After deposit the service tax on above said GTA Services we will take the Credit on above said deposit tax on other services.

3. We are making separate invoice to recover the Freight charges - without collecting of Services because service tax paid by Customer as per RCM Basis).

Now Department Audit party want to Reversal of all such input tax credit taken by us ( e.i. All service tax paid on GTA Freight Charges paid by us ).

They are saying that this is not cover in output services.

Kindly Advise us Asap.

AI Summary

Freight company disputes audit on input tax credit reversal for service tax under RCM for GTA services. A company providing freight and forwarding services is facing an audit challenge regarding the reversal of input tax credit on service tax paid under the reverse charge mechanism (RCM) for Goods Transport Agency (GTA) services. The audit department argues that the input tax credit is not applicable as output services are not provided. The company contends that the service tax paid on GTA should be considered an 'output service' under certain legal precedents, allowing them to utilize CENVAT credit. The discussion includes references to case law and amendments in CENVAT Credit Rules, seeking expert advice on the matter.