Input service tax

This query is : Resolved

purshotam vyas (Querist)
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18 September 2013 A BPO service provider for the purpose of pick & drop facility for their employees, is taking services of transportation agency(motor veichle hire). So the service receiver is paying service tax as per partial Reverse charge mechanism.
Whether the service receiver can get credit of service tax paid ?
Whether it could be said that this service is related to core business ?

CA Vikas Acharya

CA Vikas Acharya (Expert)
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18 September 2013 2. Full Reverse charge on input service (on 100% by you as SR)
--though tax on your output – full
CCR will be fully allowed, now check when to pay tax and when ccr allowed.
POT As per POT,2011 rules, rule 7 says in case of reverse charge, pot(i.e, for input service) will be the date of payment.(as per proviso of this rule if payment not made within 6 months, then normal pot apply)
CCR Rule 4(7)’s proviso CCR in case of reverse charge allowed on or after date of payment of service value and s.tax. CCR will be allowed to only SR on the basis of GAR-7.
But If payment not made within 3 months of date of invoice you need to pay the Amount as per CCR rules

Now, Newly inserted: Explanation to Rule 3(4) of CCR provides that “CENVAT Credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient.”(you)

Logic behind this explanation is that this ccr can be used to pay only providing output tax liability, hence can’t be used for providing your this reverse charge liability as it is on input service.

CA Vikas Acharya

CA Vikas Acharya (Expert)
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18 September 2013 yes it is related to business and thats enough to get the credit as per cenvat credit rule 2(l)

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