Cenvat Credit Whether Eligible as input

I ask my question in form of below illustration.

A:- Service Receiver

B:-Service Provider

 

B provide service of commission. It charge and collect the amount from A since last 4 years

All of sudden B know that it is liable for service tax so it paid service tax on receipt of all last 4 year commission.

B send the challans to A to reimburse service tax paid by B of last 4 years.

 

Whether A can claim it as expenses or input service tax credit ??

Replies (2)
Originally posted by : CA Chintan Vyas

I ask my question in form of below illustration.

A:- Service Receiver

B:-Service Provider

 

B provide service of commission. It charge and collect the amount from A since last 4 years

All of sudden B know that it is liable for service tax so it paid service tax on receipt of all last 4 year commission.

B send the challans to A to reimburse service tax paid by B of last 4 years.

 

Whether A can claim it as expenses or input service tax credit ??

B has freedom to get 1st lacs exemption on commission received. and spread over 4 years its 40 lacs, so we dont think that B has to charge for arear years. 

B can pay the whole of service tax as per his own wish but can not claim from A for preceeding years, 

A can not take credit of such commission based service tax , as it does not qualify for "input services"

In my View , first of all B has to deposit the  last four yaer Service Tax with Interest and If A reimburse the payment of service Tax to B then only he can take the Cenvat credit of service Tax. 

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