Input credit under rcm
Querist : Anonymous
We are service receiver (proprietorship firm) and we had to pay 100% duty under RCM on manpower supply case.
In Apr'15 we had taken input credit of service and adjusted against excise but not paid the tax till yet and as per service tax rule no credit can be taken until payment of service tax under full reverse charge.
Now I want to know that We had to reverse that credit in May'15 and then pay and then again take the credit.
Or we can pay the tax of Apr'15 along with May'15 tax in June'15 without reversing the amount.
Please reply.
Reverse the credit, pay and then take the credit.
Querist : Anonymous
Thanks for the prompt reply.
I know we are not liable to pay but if we pay the full tax on behalf of service provider then is there will be any issue.
Querist : Anonymous
As the provider is not paying the tax and when we inquired from other proprietorship firms nearby our company they are paying the tax on their behalf that's why we have to make the payment.
So no interest or penalty will be charged from service receiver if we are paying.
Right course is You don't pay service tax under RCM and also don't take cenvat credit.
No interest and penalty will be levied from service receiver provided availing cenvat credit is not objected by dept.
Your service provider may be small service provider exempted from service tax.
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