Reverse charge

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This query is : Resolved

Mayanka Agrawal (Querist)

10 September 2013 if cenvat credit not available as we are not providing output service then can we claim refund for service tax paid under reverse charge

Sumit Grover

Sumit Grover (Expert)

10 September 2013 You can't go for refund, since no such provisions exist in the Finance Act,1994 or Service Tax Rules, 1994.

Though rule 5B of CENVAT Credit Rules, 2004 has allowed the refund of CENVAT on account of service tax paid under Reverse Charge subject to the procedure prescribed(but the same has not been made operative yet, since no procedures have been introduced so far)

Mayanka Agrawal

Mayanka Agrawal (Querist)

13 September 2013 if service provider under work contract is charging and paying service tax under composition scheme then is our liability still exists...

and if yes then we also have to pay under composition as my liability is of 50% only...

and he charge 50% his liab. only on bill

and i have to deduct my liability from his pay amount or have to pay from my pocket...& then can take credit

Sumit Grover

Sumit Grover (Expert)

13 September 2013 First of all, I would like to bring to your notice that Composition scheme under service tax has been revamped w.e.f. 01-July-2012 and the valuation mechanism regarding works contract has been incorporated in rule 2A of Service tax(determination of value) rules, 2006, vide notification no. 24/2012-ST

Coming to your query, following is the reply thereto:
You need to pay your portion of service tax liability (under Reverse charge mechanism) to service tax deptt. from your own pocket, additionally.

And after depositing the service tax to the department as well as making the portion of bill amount to the Vendor,you can claim the CENVAT of the same, provided the same falls under the definition of input services as defined under Rule 2(l)of CENVAT Credit Rules, 2004.

Mayanka Agrawal

Mayanka Agrawal (Querist)

13 September 2013 so I also pay his liability under composition scheme...

thanks for your continuous reply

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