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Querist : Anonymous

Querist : Anonymous (Querist)

07 July 2014 Received a bill under RCM in june
when pay service tax under RCM (in which month)
and when take ccenvat credit (means which date take cenvat credit)
please reply this question.

Ganeshbabu K

Ganeshbabu K (Expert)
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16 July 2014 Where service tax is payable under reverse charge basis (partly or fully) the provisions w.e.f. 1-9-2014 are as follows –

Where entire service tax is payable by service receiver – Where entire service tax is payable by service receiver, he can take Cenvat credit on basis of GAR-7 challan after making payment of service tax. He can take Cenvat credit whether or not he make payment of value of invoice to service provider [first provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].

The credit should be taken within six months from date of payment by GAR-7 challan/internet – sixth provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014.

When partial service tax is payable by service receiver – When partial service tax is payable by service receiver, the Cenvat credit can be taken only after making payment to the service provider of the value of input service and service tax [second provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].

[There is drafting mistake. Really, in respect of service tax charged by the service provider in his invoice, that portion should be allowable immediately on receipt of invoice. This is clear from the third proviso to rule 4(7) as stated below.]

If payment is not made to service provider within three months, the Cenvat credit taken should be reversed (as per section proviso to rule 4(7) as presently worded, the Cenvat credit cannot be taken at all. Then where is the question of reversal?). Later, when he makes payment of invoice value and service tax to service provider, he can take back the Cenvat credit, which he had reversed earlier [third provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014].

In case of portion of service tax payable by service receiver under reverse charge, the Cenvat credit should be taken within six months from date of payment by GAR-7 challan/internet payment – sixth provisio to rule 4(7) of Cenvat Credit Rules, inserted w.e.f. 1-9-2014.

Ganeshbabu K

Ganeshbabu K (Expert)
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16 July 2014 Above is Budget update relevant to you,
.
.
Ans for your query:-

1)Invoice is in June

2)Cenvat on invoice can be taken immediately on date of invoice

3)Service tax is payable by service receiver when actual payment is made to service provider and not on receipt of Invoice from service provider.

4)However, if payment is not made to service provider within 6 months, service tax is anyway payable. Interest is also payable.

5)Once paid, Cenvat credit can be taken if otherwise it is his eligible ‘input service’.

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