Service tax credit

[manish kumar]

Sir,

A builder has Shown closing balance of Cenvat credit in their April to June, 2017 ST-3 return of apuprox. 05 lakhs & now their project has been closed because they have issued B.O.C. for their building project. & they have not claimed any ITC credit in Trans-1. Now during audit if liability comes for payment of Service tax payment , can they utilise their closing balance of Credit for payment of Service Tax.

[KASTURI SETHI]

In my view, you can discharge liability pertain to pre-GST era out of balance of credit lying as on 30.6.17. Problem is in discharge of GST liability and not Service Tax liability. That is your legal right. You have paid Service Tax and you want to utilise that credit of Service Tax. You are not causing any revenue loss to Govt. Otherwise there is no procedural problem also.

[manish kumar]

Thanks Sir for valuable reply, In this regard I have to state that the assessee have not forwarded their credit in Trans-1. In this way , their credit have been lapsed in present day, Then how can they utilise their credit ?

[KASTURI SETHI]

No doubt. Issue is debatable but if you fight legally, you will get relief. It is matter of "time factor". Procedural or technical lapse should not hit substantive right of assessee. If you do not fight, you will suffer loss today itself. So make efforts. Every thing should be brought to the notice of the department in order to avoid penalty. Many assessees have filed writ petitions in various High Courts to claim such lapsed credit. You must apply for such relief and the department may reject. Thereafter, you should file appeal with the Commissioner (Appeal). GST Acts are still in its infancy stage. So you can hope via amendment or litigation. I am hopeful you will get relief.

[Ganeshan Kalyani]

As per transition rule, the closing balance of cenvat credit, service tax, VAT was to be carry forward to GST by filing GST TRAN-1. Since, you have not transferred the credit in GST. You can request the department to allow for payment of service tax thru the credit available in erstwhile law.

[KASTURI SETHI]

Dear Querist, If you feel the phobia of the department, apply for refund as advised by Sh.Ganeshan Kalyani Ji. The lapse of credit has been challenged in various High Courts, there is every possibility that you may get relief. Also do not forget that this is an election year !!

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got registration with GST?

AI Summary

Builder Seeks to Use Unclaimed Cenvat Credit for Pre-GST Liabilities; Experts Advise Legal Action and Potential Appeals A builder has a closing balance of Cenvat credit from April to June 2017, amounting to approximately 5 lakhs, which was not claimed in the Trans-1 form after the transition to GST. During an audit, if a service tax liability arises, the builder seeks to use this credit. Experts suggest that while the credit was not transferred to GST, it might still be possible to use it for pre-GST liabilities through legal action. They recommend applying for relief, potentially filing an appeal if initially rejected, as similar cases have been challenged in various High Courts.