CENVAT Credit on past period service tax payment

[Pradeep Jain]

Dear Sir,

Our Company had availed services  from  year 2005-06 to Oct'2007 of    Management , Maintenance  and Repairs , for this purpose Service  Providers also engaged Manpower and no service tax was charged by him . During our Head Quarter Audit this point was raised , that Service Provider is  liable to pay service tax thereon.

On the basis of the above information Service Tax Officers of Preventive Branch searched the premises of  the service provider and after that issued a show-cause notice to the service provider for payment of  said service tax of Rs. 4,47,287/- and imposed penalty under section 76,77 and 78 of the  Finance Act. Out of the said demand Rs. 1,49,568/- accepted and paid by the service provider. However , the total demand confirmed along with penalty ,as above.

The Service Provider has filed an appeal before the Commissioner Appeal, Indore. The Hon'ble Commissioner has appropriated the amount of Rs. 1,49,568/- as acepted by the  Service Provider and set aside the rest demand along with  penalty e, on the  ground that that the said demand is not covered under the ' Management , Maintenance and Repair Service, and reject the charge to intent to evade of tax payment by service provider.

-Service Provider  has been instisting for payment of service tax of Rs. 1,49,568, on the basis of the above order and the  copy of  Service Tax paymnet Challans;

Now Query is that:-

1- Are we entitled to avail CENVAT Credit e , as above,on the basis of the said service tax challan;

2- Is there any need to get Supplimentry Invoice;

3- Is ther any chances to issue SCN by our Range office  after availment of CENVAT Credit of Service Tax.

Regards

Pradeep Jain

[YAGAY andSUN]

Since the amount of service tax has been deposited after issuance of Show Cause Notice, and after the litigation proceeding, hence no CENVAT credit will be available to you.  The amount recovered by the Department will be used for Consumer welfare Fund.

Since it is a Statutory obligation to pay the Taxes, therefore, you would have to pay the outstanding amount to the Service Provider.  He may issue an supplimentory invoice.  But you may deny him for penalties and statutory interests.

If you avail the CENVAT credit on such amount, then, Department will surely issue SCN in this scenario.

It is advisable not to avail the CENVAT credit.

[Vigneshwari M]

Dear Sir,

Can you pls explain further on this point? What is the relevant legal provision which says that the amount recovered by the Department will be used for Consumer Welfare Fund. 

Why is it not advisable to avail cenvat credit after the issue of SCN. 

Thanks,

Vigneshwari

AI Summary

CENVAT credit availability denied where service tax paid after show cause notice; availing credit risks departmental SCN. The central issue is whether CENVAT credit can be claimed for service tax paid by a service provider after issuance of a show cause notice and during litigation. The recorded advice states such credit is not available where tax was deposited post SCN; the recipient should pay the provider but may refuse penalties and interest; a supplementary invoice may be issued by the provider; availing credit in these circumstances risks a departmental SCN and is therefore discouraged.