Declared service Section 66 E

[Kewalchand Jain]

A company receive a credit note for law quality service and service tax is returned with credit note as per contract signed. Whether the service tax paid on credit note is eligible for cenvat credit

[KASTURI SETHI]

Yes. Credit Note is eligible for Cenvat Credit. as per Section 67 (c) of the Finance Act,"gross amount charged" includes payment by issue of credit notes. Reference of original invoice is to be mentioned on the credit note. Also go through Board's circular :-

Cenvat credit availment on input services - Clarifications

Circular No. 122/3/2010-S.T., dated 30-4-2010

[Kewalchand Jain]

Can a company claim service tax paid on declared service by paid by service provider

[Ganeshan Kalyani]

In my view, service provider can take benefit of the service tax on credit note.

[KASTURI SETHI]

With reference to query no.2 above, answer is 'yes.'.

The purpose of declaring service under Section 66 E

The activities declared under Section 66 E are covered by the definition of 'service' under Section 65 B(44) with a view to remove any doubt for the purpose of uniform application of law all over India. So no dispute about being service in nature. Any service being declared under Section 66 E is not a hurdle in taking Cenvat Credit of Service Tax paid.

Under Section 68(1) of the Finance Act, 1994, the service provider is to collect Service Tax from service receiver and deposit into Central Govt.except RCM. Under Section 68(2) service receiver will pay Service Tax in cash. Legal services fall under RCM at serial no.5 of Notification 30/12-ST dated 20.6.12 as amended.

There is no hurdle in taking cenvat credit on the strength of credit note (linking to original invoice) by a Company.

All aspects have to be taken care of.

AI Summary

Cenvat credit eligibility affirmed where service tax on credit notes is linked to the original invoice and properly recorded. A credit note reducing service consideration and recording returned service tax is eligible for Cenvat credit when it references the original invoice and complies with statutory requirements; Board circulars clarify availment on input services. Declared services remain services for credit purposes and do not prevent taking Cenvat credit. Normal collection obligations rest with the provider, while reverse charge arrangements require recipient payment; legal services fall under reverse charge notifications, necessitating proper documentation and adherence to RCM conditions to validate credit on credit notes.