Ccr on gta service allowable to sr in case of abatement

This query is : Resolved

Sugam Sharma (Querist)
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24 June 2015 Dear Expert,

One of my client being a Pvt Ltd Co. engaged in manufacturing activities. It is registered under excise law as well as under Service Tax as Service Receiver so far Service tax on Input Freights paid to GTA.

My client is paying Service tax on Freight Inwards to Transporter @ 25% on Taxable value of Freight Charges i.e.after getting abatement @ 75% thereon as per Service tax Notification under Complete RCM.

Now query is whether my client can take Cenvat Credit on such ST Paid on Freight Inwards & utilized the same for paying the Excise Duty payable on excisable Finished Goods.

Example:--
Gross Amount (Freight) 200000
Abatement Claim @ 75% 150000
A.V. 50000
Service Tax Paid 6180

So Can he get the credit of service tax paid of Rs. 6180...??

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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24 June 2015 Yes he can get the credit of service tax paid on freight as cenvat credit for paying excise.

Sugam Sharma

Sugam Sharma (Querist)
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25 June 2015 sir my client says that he claim abatement hence credit is not available..

any rule in this regard if any please provide me to support...

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 June 2015 Now the general rule is that, the cenvat credit is not available when we are providing services availing the benefit of abatement. But this is applicable only on service provider and not on service recipient.
Therefore, the cenvat credit of GTA service is available to a service recipient even though the service tax under reverse charge has been paid after claiming abatement of 75%.
However, the Central Excise and Service tax department were constantly taking a view that the cenvat credit is not available as the tax is paid after claiming abatement. Or the recipient has to get an undertaking from the provider that they have not claimed the abatement.
This issue is set at rest. A new Notification no 08/2014 applicable w.e.f. 11th July 2014 has been introduced.
The amendment clarifies that the condition for non- availment of credit is required to be satisfied by the service providers only. Service recipient will not be required to establish satisfaction of this condition by the service provider.

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