Cenvat credit

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Mistavddre

36 Points Posted on 21 October 2015

A Mr.X had "taken" Cenvat credit but did not "utilise" it for payment of service tax, thus there was closing balance of cenvat credit in ST3 Return of previous quarter.

But even for current quarter, Mr.X still did not "utilise" the previous quarter's closing balance of cenvat credit, so balance of cenvat credit is still carried forwarded in ST3 Return.

So, my question is whether any time limit is there for "utilising" this cenvat credit? Does the Cenvat Credit Rules state any time limit?

If the time limit for "utilising" cenvat credit is indeed unlimited, how do we infer it?

Replies (4)

Vishal Goel

Chartered Accountant

1725 Points Posted on 21 October 2015

Hello , I think time limit is 1 year....

CMA Poornima Madhava

CMA

9106 Points Posted on 21 October 2015

I think time limit of 1 yr is to avail cenvat credit. For utilization there is no restriction of time limit.

Madhukar N Hiregange

Chartered Accountant

33545 Points Posted on 23 October 2015

There is no time limit for carrying forward the cenvat credit. Further no time limit for utilisation.

In case of exports the possibility of refund of accumulated credit exists.

The credit which may notbe utilised in the near future maybe avoided to be availed as the income tax on the same would be paid as credit goes to reduce the costs.

Vishal Goel

Chartered Accountant

1725 Points Posted on 24 October 2015

Yes Poornima Ji & Madhukar ji are right

Till September 1, 2014, there was no time limit prescribed under the Credit Rules for availment of Cenvat credit. However, effective from September 1, 2014, the said liberty in respect of availment of Cenvat credit on Inputs/ Input Services was withdrawn vide Notification No. 21/2014-CE dated July 11, 2014 (Applicable w.e.f September 1, 2014), amending Rule 4(1) [for Inputs] and Rule 4(7) [for Input services] of the Credit Rules in order to fix a time limit of 6 months from the date of issue of any of the documents specified in Rule 9(1) thereof, for availment of the Cenvat credit.

Considering the hue and cry created in the Industry, the Union Budget, 2015 has enhanced the stated time limit (effective from March 1, 2015) for availing Cenvat credit on Inputs and Input services to 1 year (as against 6 months earlier) from the date of issue of any of the documents specified in Rule 9(1) of the Credit Rules.

There is no time limit for utilization of cenvat credit once validly claimed in ST-3 returns.