Cenvat credit of service tax

[CA.ANCHAL RASTOGI]

A PUBLIC LIMITED COMPANY ENGAGE IN PRODUCTION OF EXCISABLE ITEM, USE SERVICES OF VARIOUS CONTRACTORS / JOB WORKERS / MANPOWER SUPPLIERS ETC. THESE SERVICES PROVIDRS CHARGE SERVICE RAX FROM US BUT DO NOT DEPOSITE. ON OTHER HAND WE TAKE CENVAT OF THOSE AMOUNT OF SERVICE TAX. 1. WHAT IS THE LIABILITY OF COMPANY? 2. CAN S T DEPT TAKE ANY ACTION AGST COMPANY (SERVICE USERS) 3. WHAT SHOULD COMPANY TAKE ACTION / PRECAUTION TO PROTECT THEMSELF?

[Surender Gupta]

In case you know the service provider is not paying service tax while charging from you, either you should educate that person to comply with the service tax provision or not to reimburse the service tax amount. Taking cenvat credit may be risky in this case.

AI Summary

Cenvat credit may be risky when service providers charge but fail to deposit service tax; ensure provider compliance first. Company took Cenvat credit on service tax charged by service providers who did not deposit the tax. The reply advised that if the company knows the provider is noncompliant, it should require the provider to comply or not reimburse the service tax component, because claiming Cenvat credit in those circumstances is risky.