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Cenvat credit vs service tax paid on advance recvd

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Am a service provider cum service recvr....I have recvd Advance from my client on the services to be provided to him...Now am liable to pay Service tax (Output) on the advance recvd from my client....On the other hand i have recvd service from my service provider who charges Service tax (Input) on me....My question is whether can I adjust the Input against the Output?

Note: I have not provided the service and I have only recvd the advance from my client

Pls substantiate your answers!!!!!!!

Replies (1)

Yes, you can adjust such credit against your service tax liability. In any case, whether you are paying service tax on advance received before provision of service or after providing the service, the tax represents Service Tax on Output Service. In my opinion, CENVAT credit rules do not place any bar on utilisation of CENVAT credit for payment of service tax on advance received in respect of any taxable output service.

 

Rule 3(4) of CCR, 2004 is as follows:

 

"(4) The CENVAT credit may be utilized for payment of –

(a) any duty of excise on any final product; or

(b) an amount equal to CENVAT credit taken on inputs if such inputs are removed as such or after being partially processed; or

(c) an amount equal to the CENVAT credit taken on capital goods if such capital goods are removed as such; or

(d) an amount under sub rule (2) of rule 16 of Central Excise Rules, 2002; or

(e) service tax on any output service:"

 

Hence, it seems no restriction has been imposed vide CCR. 

You can wait for others to post.


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