ST paid first CENVAT later
This query is : Resolved
12 August 2010
DEAR SIR
A LARGE EPC CONTRACTOR RECEIVED ADVANCE FROM IT'S CONTRACTEE FOR ESTABLISHING A PLANT.
HE PAID THE SERVICE TAX ON WHOLE AMOUNT RECIEVED AS PER THE LAW.
NOW IN THE SUBSEQUENT PERIODS (MORE THEN 1 YEAR LONG) WHILE EXECUTING THE SAME PROJECT HE IS RECEIVING INPUT SERVICES/GOODS ON WHICH CENVAT CREDIT IS AVAILABLE.
HOW WILL HE GET THE CREDIT OF CENVAT? SHOULD HE ADJUST IT WITH FUTURE RECEIPTS OR APPLY FOR THE REFUND CLAIMS?
WHAT IF THE WHOLE AMOUNT IS RECEIVED IN ADVANCE?
A LARGE EPC CONTRACTOR RECEIVED ADVANCE FROM IT'S CONTRACTEE FOR ESTABLISHING A PLANT.
HE PAID THE SERVICE TAX ON WHOLE AMOUNT RECIEVED AS PER THE LAW.
NOW IN THE SUBSEQUENT PERIODS (MORE THEN 1 YEAR LONG) WHILE EXECUTING THE SAME PROJECT HE IS RECEIVING INPUT SERVICES/GOODS ON WHICH CENVAT CREDIT IS AVAILABLE.
HOW WILL HE GET THE CREDIT OF CENVAT? SHOULD HE ADJUST IT WITH FUTURE RECEIPTS OR APPLY FOR THE REFUND CLAIMS?
WHAT IF THE WHOLE AMOUNT IS RECEIVED IN ADVANCE?
12 August 2010
Assesses having centralised registration who paid excess amount of Service Tax, on account of non-receipt of details regarding the receipt of gross amount for the services at his other premises or offices, may adjust such excess amount against the Service Tax liability for the subsequent period and furnish the details of such adjustment to the Jurisdictional Superintendent of Central Excise/Service Tax within 15 days from the date of such adjustment (Rule 6(4A) of the STR, 1994).
More expert opinion is solicited.
More expert opinion is solicited.
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13 August 2010
The question is not clear. I presume that u have recd an advance and since paid ST on the same. U got input credit also. U want to know whether u can utilize the credit or ask for refund. It is advisable to utilize the credit for future services rather than asking for refund. If u are availing abatement u cannot avail input credit. I am not able to understand this WHAT IF THE WHOLE AMOUNT IS RECEIVED IN ADVANCE?
Vipin Gupta
(Expert)
14 August 2010
You should utilize the credit against future payment of serivce tax. Refund for service tax is available only if you have exported the serivce.
VINOD ARORA
(Expert)
15 August 2010
in such a situation where EPC contractor has to deposit service tax on advance receipts, there is no bar on availing/claiming input credits later and in case the same are not adjusted/covered sufficiently by output service tax liability, the EPC contractor may claim refund in due course.
ofcourse the process may attract service tax audit or other queries to demonstrate the mismatch, however there will not be any difficulty for genuine situations, i believe.
ofcourse the process may attract service tax audit or other queries to demonstrate the mismatch, however there will not be any difficulty for genuine situations, i believe.
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16 August 2010
Thanks for your replies all the experts
Mr Arora I actually want to know that if contract period is very long and after one year of payment of Service Tax the assessee comes to know that he has paid excess tax (Due to excessive Cenvat credit he received in relation to such work), then how will he safeguard himself from time limitation of one year for claiming refund?
How will he reflect this in his service tax returns?
Mr Arora I actually want to know that if contract period is very long and after one year of payment of Service Tax the assessee comes to know that he has paid excess tax (Due to excessive Cenvat credit he received in relation to such work), then how will he safeguard himself from time limitation of one year for claiming refund?
How will he reflect this in his service tax returns?
16 August 2010
Mr Balu,
from the phrase
"WHAT, IF THE WHOLE AMOUNT IS RECEIVED IN ADVANCE? "
I mean that if the contractor has revived the whole/major part of 'contract amount';before the execution of contract, in this situation, what will be your answer?
from the phrase
"WHAT, IF THE WHOLE AMOUNT IS RECEIVED IN ADVANCE? "
I mean that if the contractor has revived the whole/major part of 'contract amount';before the execution of contract, in this situation, what will be your answer?
VINOD ARORA
(Expert)
17 August 2010
I believe, in the given case the EPC contractor is availing/claiming input credit in due course, i.e. it is done as and when the payment is made to subcons/service providers down the line.
Hope there is no fault on this acccount, i.e. no accounting errors/delays in recognising the amount of input credit.
In such a situation, the matter of claiming refund within limitation period does not arise. The credit claim shall be allowed later also as per eligibility /procedures laid down under s.tax law.
It may please be noted that refund claim may be filed only when there is refund situation.
In this particular case it is not advisable to carry over such excess paid service tax, i.e.better to claim refund unless there is possibility that such excess paid amount may be fully utilised in the next tax period.
Hope there is no fault on this acccount, i.e. no accounting errors/delays in recognising the amount of input credit.
In such a situation, the matter of claiming refund within limitation period does not arise. The credit claim shall be allowed later also as per eligibility /procedures laid down under s.tax law.
It may please be noted that refund claim may be filed only when there is refund situation.
In this particular case it is not advisable to carry over such excess paid service tax, i.e.better to claim refund unless there is possibility that such excess paid amount may be fully utilised in the next tax period.
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