Cenvat Credit in case of Reverse Charge Mechanism

[Dhirendra Srivastava]

Dear Professional colleagues, My Query is regarding Payment of Service Tax Under Reverse Chage Method. I can understand that Service in relation to which Service Tax under reverse charge is paid cannot be treated as output service, But can we treat it as input service. For examsple can we use the Service Tax paid under reverse charge for payment of Service Tax? Excise Duty.

[Sucheta Agrawal]

Dear Mr. Dhirendra,

Your query is not very clear, about ur asking. but the things which i hv understood is that " can we use the Service Tax paid under reverse charge for payment of Service Tax"? Thus my answer is in your favour bcz payment of service tax under reverse charge method treated as the same as originally payment of service tax. thus u can take credit if u make any payment through reverse charhe method.   

 

[maharajan ganapathi]

Dear Dhiruji,

It is as simple as that instead of the service provider collects service tax from the service receiver and remit the same  to the Government account the same work is beong carried out by the servicer receiver himself, being the other concepts are same.  therefore it is rightly be treated as input service credit and can be utilised accordingly interms of the provisions of Cenvat Credit Rules.

[Surender Gupta]

Yes, the service being received from outside India and service tax is being paid the recipient of services under reverse charge method, would be Input Service if it is used for providing output services or satisfies the other conditions of Cenvat Credit Rules, 2004. 

AI Summary

Cenvat credit under reverse charge qualifies as input service credit when Cenvat Credit Rules conditions are met. Service tax discharged by the recipient under the Reverse Charge Mechanism is treated as equivalent to tax paid in the ordinary course and, subject to compliance with the conditions and restrictions in the Cenvat Credit Rules, qualifies as input service credit and may be availed and utilised in accordance with the Rules' procedural and substantive limits.