Catagory of Service -Reg.

[vinay wakde]

We are receiving various Input services against which we are taking CENVAT credit only after actual payment to the service providers. During the Excise Audit we have been asked to collect the documentary evidence of some of the service providers, whether they have deposited the Service Tax payment to the Government treasury within three months of time, otherwise the credit taken by us is denied.

Is there any provision in  Cenvat Credit Rule? As per my knowledge, credit should not be denied if the service providers are collected the service tax & not deposited to the Government treasury. Is there any change in the credit Rule? Kindly clarify.

Regards,

VINAY

 

[YAGAY andSUN]

Please refer F.No.341/34/2010-TRU dated New Delhi dated the 31^st March, 2011 in this regard.  For ready reference relevant text is mentioned below for your kind information:-

The credit of input services under rule 4 (7) of the CENVAT credit Rules has also been liberalized vide Notification 13/2011-CE(NT) dated 31.03.2011 and the same shall be available on receipt of invoice (except in cases of reverse charge) as long as the payment is made within three months.  Even specified persons required to pay tax on cash basis will be able to avail credit on receipt of invoice.  Suitable changes have also been made for reversal of credit or payment when the value of service is renegotiated or altered for any reason by refund or issue of a credit note by the service provider.  Amendment has also been made in Rule 9 of CENVAT credit Rules, 2004 by allowing credit on supplementary invoice, except in non-bonafide cases, which may become necessary in certain situations e.g. where the point of tax is the date of payment while the invoice had already been issued e.g. rule 4(b)(i) of Point of Taxation Rules.

[Mahir S]

There are no such provision for producing documentary evidence regarding payment of serivice tax by the service proider. Your responsibility in the matter is already over as actual payment is done to the service provider.

I guess the main query of the excise audit must be based on the invoices issued by the service proivder or in relation to your accounts pertaining to making of paymnet to the service provider. Hence, it is advisable to know the views of the department for raising such query.

Also, the department must not have raised any audit para on the matter raised in your query.

 

 

AI Summary

Cenvat credit availability on invoice receipt follows where payment to the service provider is made within the prescribed period. Cenvat credit for input services is available on receipt of invoice provided payment to the service provider is made within the prescribed period; amendments permit credit on supplementary invoices except in non bona fide cases and address reversals when service value is renegotiated or refunded. No rule requires recipients to produce documentary evidence that the service provider deposited service tax to the treasury, as the recipient's responsibility is discharged by actual payment to the provider.