Cenvat credit for Service Tax on Royalty

[Pradeep Kaushik]

Respeted Sir/s,

In our case, we have to pay Royalty on Sale to In Korea and  commission on Guarantee. This is our liability to deposit the Service Tax on the Remitted amount.

1. Is service tax applicable on Commission on Guarantee.

2. Can we adjust the Liability from our Cenvat credits.

3. If we have to deposit the Sevice Tax then can we take the Cenvat Credit of the Service Tax deposited.

 

Please clarify.

Best Regards.

Pradeep Kaushik

 

AI Summary

Reverse charge liability: service tax on royalty and guarantee commission must be paid in cash; credit claim possible.
Service tax on royalty and commission on guarantee is payable under the reverse charge mechanism and must be discharged in cash; CENVAT credit cannot be used to pay that liability. Service tax paid under reverse charge is eligible for CENVAT credit subject to the Cenvat Credit Rules, 2004. If CENVAT was wrongly used earlier, the department may demand tax with interest in cash, and the taxpayer may pay in cash, seek re-credit of the earlier debit, and then claim credit if the cash-paid tax qualifies as an input service under the CCR, 2004.