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Cenvat Credit in Payment of Service Tax

Sanjeev Walia (Accounts & Finance) (72 Points)

06 March 2009

please help me in one case where we have paid full advance (including service tax) in feb 09 for which service provided and bill given by party in the month of feb 09 itself but bill passed by management on 03rd march 09 and entry passed for cenvat credit and expense on 3rd march itself. now can we avail cenvat credit against service tax payable for feb 09 (coz we pay service tax for feb on 05th mar) or we have to avail it against mar months service tax liability

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3 Replies

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 06 March 2009

Originally posted by :Sanjeev Walia
"	please help me in one case where we have paid full advance (including service tax) in feb 09 for which service provided and bill given by party in the month of feb 09 itself but bill passed by management on 03rd march 09 and entry passed for cenvat credit and expense on 3rd march itself. now can we avail cenvat credit against service tax payable for feb 09 (coz we pay service tax for feb on 05th mar) or we have to avail it against mar months service tax liability	"

The credit for input services is only available on payment. Therefore only for the March ST payment would the amount be usable.

Madhavendra (CA Final Student) (99 Points)
Replied 06 March 2009

Invoice is required even when advance is received by the service provider.Cenvat Credit should be available to service receiver on basis of this invoice as 'service to be provided' is also a taxable service w.e.f 13-05-2005. Hence the Service provider will have to pay the service tax what he has collected from you in the month of feb and pay before 5th / 6th of march 09. You are also eligible to utilise the cenvat credit for the month of feb 09.please refer circular no.B1/6/2005-TRU dated 27-7-2005 para 27.

Sanjeev Walia (Accounts & Finance) (72 Points)
Replied 06 March 2009

Originally posted by :Madhukar N Hiregange
"	Originally posted by :Sanjeev Walia " please help me in one case where we have paid full advance (including service tax) in feb 09 for which service provided and bill given by party in the month of feb 09 itself but bill passed by management on 03rd march 09 and entry passed for cenvat credit and expense on 3rd march itself. now can we avail cenvat credit against service tax payable for feb 09 (coz we pay service tax for feb on 05th mar) or we have to avail it against mar months service tax liability " The credit for input services is only available on payment. Therefore only for the March ST payment would the amount be usable.	"