Sunil Nayak (Chartered Accountants) 08 June 2008
Mr. X has paid service tax on import of services from UK as a receipient of service as per section 66A of the Service Tax Law. Can he avail CENVAT credit on this?
Rule 3(1) provides that CENVAT credit is available to the service tax paid under section 66 of the Act. Further, Rule 5 of Import of Service Rules says that, the service received from outside India shall not be treated as output service for the purpose of taking Cenvat Credit.
Please clarify whether Mr. X can take CENVAT credit of tax paid on import of service? If Cenvat credit is not available, can he claim refund of tax paid as a recipeint fo service?
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cashekar (Chartered Accountant) 10 June 2008
With regard to your query:
Now the department has become active in this regard. The departments contension is that under the cenvat credit rules only credit is allowed for Section 66 payments and not applicable to 66A payments. But technically you can take a stand the the rate of service tax is not mentioned in sec 66A and states that all the provision of Chapter V of Finance Act becomes applicable. hence the levy is under 66 of the service tax itself. Even there is a circular to the effect that the taxes paid under the import of service rules can be setoff against the payment of other output service tax payable.
Tushar Bhootra (CA) 23 October 2009
Hey I also Wanna Know about the Provision in relation to Availment of Canvat credit for the Services received from out of India..I also agree with Mr. Taxolegal..but still confuse..can clarify with reasons...
A. Kiran Kumar (Manager - Indirext Taxation) 24 October 2009
Board has given a clear clarification on this issue allowing cenvat credit of service tax paid on import of services in reverse charge mechanism. Please see attached file.