Cenvat credit availment on partial reverse charge mechanism

Queries 2418 views 3 replies

Varun Kumar Shetty

Associate

37 Points Joined October 2008

Hi,

My query is that when a service receiver who is liable to discharge certain portion of the serivce tax payable directly to the Government(say 75% in case of Man Power Supply) on the service received under the partial reverse charge mechanism discharges his liabilty by paying the full portion of service tax to the service provider (instead of paying 25% to Service provider and 75% to Govt, pays the full 100% to the service provider), is he eligible to claim CENVAT credit to the extent of 75% or the full 100%?

Replies (3)

Madhukar N Hiregange

Chartered Accountant

39039 Points Joined September 2008

The liability to pay on 75% if on the receiver- he needs to discharge.

If provider has charged on 100% to pay only 25% and ask the provider to revise the bill.

Legally he can avil the credit of 100% if charged by provider- unnecessary dispute possible.

Lucyan Mamisa

2 Points Joined November 2022

Thanks. I will base on this to count bloxorz

Crosby Jimmy

4 Points Joined February 2023

Yet it is worth noting that where the supplier is required to pay a portion of the service tax but the recipient pays the entire tax, there is no revenue loss. There have been case laws on the subject where double taxation was avoided on the grounds that the government treasury was not harmed.

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