Service Tax on reverse charge method - reg.

[vinay wakde]

Our company is member of Sponge Iron Manufacturers Association(SIMA), New Delhi.  During this month we have given Rs. 1,00,000/- towards sponsorship service to SIMA.   The service Tax is payable @ 12.36% by the service recipient under R.C.method on Sponcership Service w.e.f. 01.07.2012.  Kindly let us know whether we are eligible to take Input service credit on the strength of Bank challan or not?

Regards,

VINAY

 

[YAGAY andSUN]

According to the Para 10.1.4of the Taxation of Services- An Educational Guide:-

Normally, the credit of the entire tax paid on the service received by the service receiver would be available to the service recipient subject to the provisions of the Cenvat Credit Rule, 2004. The credit of tax paid by the service provider would be available on the basis of the invoice subject to the conditions specified in the Cenvat Credit Rule, 2004. The credit of tax paid by the service recipient under partial reverse charge would be available on the basis on the tax payment challan, again subject to conditions specified in the said Rules.

AI Summary

Reverse charge: input service credit permitted to recipient where tax payment is evidenced by challan under Cenvat Credit Rules. Credit of tax paid by a service recipient under partial reverse charge is available on the basis of the tax payment challan, subject to the conditions specified in the Cenvat Credit Rules; credit of tax paid by a service provider is available on the basis of the invoice, also subject to those Rules.