Regarding service Tax Credit.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2010 Suppose in June Month co. paid commission to Distributor including Service tax and also collected charges from cusotmers including service Tax.
So in june month co. will take the service tax input credit of st paid to distributor and pay the net tax to the govt.

But what if the transaction of commssion paid to distributor is reversed in Augugst month.

As the co. has already taken credit in the month of June, what will be the final adjustment entry to be passed?

Rajan Babu

Rajan Babu (Expert)
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27 August 2010 It seems you have taken input tax credit on BAS. Since the transaction of commission paid to the distributor is cancelled, you are not eligible for input tax credit for that particular transaction and the credit taken has to be reversed. As per Rule 14 of Cenvat Credit Rules, 2004, the Cenvat credit wrongly utilised is to be paid either in Cenvat credit account or in cash alongwith interest.

Regards

Rajan Babu

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2010 Here the co. is also a service provider.
Still it can credit the St Recoverable A/C opened in B/S Asset Side or should pay in cash only