Input tax credit reversal for bad debts written off

This query is : Resolved

Adhithya (Querist)
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28 October 2010 I have a problem on hand....

Our client has written off a sum in the books of accounts.

As they are only service providers and the amount in relation to service tax for the above written off amounts was not received the service tax was not paid. We have however claimed service tax input credit for the various services used in provision of service like telephone courier etc...

as no tax has been paid for the output of service, the officer wants to add back a proportion of the input claimed as these have not resulted in provision of services were tax has been received.

Our contention is no provision stands to this effect in either service tax or in the cenvat credit rules. The officer proposes to add back the sum for the past five years.

Request your guidance on this matter at the earliest

Regards

Adhithya Srinivasan

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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29 October 2010 Service cannot be taken only exempted service in the ratio of exempted or non- exempted.

As per my understanding Service tax authority decision to reverse back the input credit for sum not received by the customer is wrong.