Clarification about the word "payment" under reverse charge

Respected members,

I have a doubt about taking credit of S.T Input.

As we know that ,

while utilizing credit of input tax paid under reverse charge mechanism principle is that the same should be utilized only after making the payment thereof to the concerned party for his amount and to govt. for the tax amount. Only after both the payments are made, can the credit thereof be utilized.

But when we make part payment to party for his amount and full tax liability to government then we can take credit or not?

i.e to say from the “payment” word, what should be concluded? Whether part payment can also be taken as payment & full credit of the input tax can be utilized?.

Replies (1)

As per Rule 9(1)(e) of the CCR,2004 the service receiver can claim the credit of St paid under reverse charge on input services  on or after the day on which payment is made of the value of input service and the service tax as indicated in the invoice.

Therefore, the credit can be taken in full only when both payments are made i.e payment for input service to service provider and St under reverse charge to Govt.

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