Suppose, during the financial year 2008-09 upto Feb'09 a company (service provider deals with both exempted and taxable service) has paid service tax equivalent to the amount of tax collected from the client time to time and not availed any Cenvat credit at any point of time. Now, for the month of March'09 the company has calculated the Cenvat Credit amount by reducing the expenditure and wants to avail the same i.e. service tax is to be paid (by 31.03.09) for the month of March'09 after adjusting accumulated input credit (April'08 to March'09) . As such, balance credit if any will accordingly be carry forwarded to the next financial year 2009-10. The compnay wants to exercise- a)Cenvat Credit Amendment Rules [Rule 6(3A)]as applicable from 01.04.2008 b) second option of rule as stated above i.e. not to pay 8% on exempted service and to follow reversal of credit.
Now, my questions are:
1. Can the Compnay utilise the accumulated credit after giving intimation to the Superintendent of Service Tax?
2. Is there any possibility that the accumulated Cenvat credit will be lapsed because of non availment upto Feb'09 ?
In view of the above situation, please guide me how and upto which period the company can utilise its accumulated Cenvat credit on input services.
22 March 2009
You can avail full credit from 1st March 2008 till date.
Don't give any intimation to Superintendent as intimation through periodic return is enough.
Assessee can avail full credit within the period of ONE year as same is treated a RESONABLE TIME period for availing CENVAT in absence of any time constraint.
As far as option of reversal or 8% up front payment is concern - one need to analyse your case and facts. Please check with appropriate consultant or get in touch with us (we are expert is these matters) before taking any stand.
CAclubindia
