Credit of service tax through TRAN-1

[Madhavan iyengar]

A Company has received service tax invoices dated June 17 and the same have been accounted in books of account in July 17 and the credit of the service tax has been availed through TRAN-1 7(1)(b) column. these service tax credit has not been routed thru TRAN-1 i

Now department is disputing the above credit

Company has paid RCM liability of service tax in July 17 of services received in April 17 and June 17 and the credit of RCM has been taken through column 7(1)(b) of TRAN-1 and same is not reflected in the service tax return

kindly advise whether this is correct

[KASTURI SETHI]

The department's objection is correct.The amount of Service Tax paid in July, 17 cannot be availed through TRANS-1 as this very amount was not the part of closing balance of ST-3 return filed as on 30.6.17. The company should have applied for refund instead of claiming the credit through TRANS-1.

AI Summary

Service tax credit through TRAN-1 disallowed where RCM payment occurred after the closing return; refund required instead. Credits or payments not reflected in the closing ST-3 balance as of the migration cutoff cannot be migrated via TRAN-1; post-cutoff RCM payments must be addressed by a refund or other statutory remedy rather than claim through TRAN-1.