Entry for service tax deposited by service receiver

SERVICE TAX CREDIT

As per Service Tax credit Rules, 2002, every service provider (output service provider) shall be eligible to avail credit of the service tax paid by him to other service providers, in respect of the services (Input service) provided by them to him. Such availment should be in relation to the rendering of service by the service provider.

Procedural Requirement

1.   If both the input and output services fall under same category of service, credit can be availed in respect of all such input service for which invoice or bill or challan is issued on or after 16.8.2002.

2.   If the input and output services fall under the different categories of services, credit can be availed in respect of input services for which invoice or bill or challan is issued on or after 14.5.2003.

3.   The output service provider shall be allowed to take such credit only after he makes payment against the bill to the input service provider.

4.   If the output service provider also provides either any taxable service which is exempted from payment of service tax or any service which is not at all taxable, the input services on which service tax is paid might be used both in respect of the taxable service as well as the exempted/non-taxable service, rendered y the output service provider. In such a case the following procedure have been prescribed.

a.   The output service provider shall maintain separate accounts in respect of the input service availed by him and utilised in the rendering of taxable service as well as exempted/non-taxable service. Credit can be availed only in respect of that quantum of input service, which is utilised by the service provider towards rendering taxable services.

b.   If the output service provider opts not to maintain such records, he can utilise service tax credit of his service tax liability, only to the extent of 35% of service tax payable on the output service.

5.   Service tax credit in respect of Telephone connection can be availed only if such telephone connection is installed in the premises where output service is provided.

6.   In support of the credit availed, the invoice or bill or challan issued by the input service provider shall be preserved. It should contain the following information: Sl. No. of the document, date of issue, descripttion and value of the input service, the service tax paid/payable, service tax registration number and address of the input service provider.

7.   The output service provider shall maintain proper records with regard to the availment of service tax credit availed by him.

8.   A half yearly return in the proforma in terms of Rule 5(4) of the Service Tax Credit Rules, 2002 has to be filed along with half yearly ST-3 return.

9.   The unutilsed balance of service tax cannot be claimed as refund.

sorry sheetal but your reply is not related to my query.

Hi,

I have answered your second que dear...

As per my knowledge The accounting entrywill be

Transportation charges Dr.

Service tax Dr.

To PArty Cr.

transportation charges will be debited net of S.tax if you are taking input credit.

nd you will be able to get input credit only if the above mentioned criteria r fulfilled.

I faced the same problem sm days ago and i got this solution from one of the S.tax consultant.

thnx sheetal but my Company is not a service provider but a manufacturing Company. Whether it can avail service tax credit

As per my knowledge Input Service Tax cerdit can be availed from the output service tax . if  you have charged service tax on any service provided by you then from that service tax you can take credit of input service tax which you have paid to transportation co.Service Tax Credit can not be claimed as refund.

I think Your co.won't be able to get S.tax credit. I think the above 9 rules may help you...

this case falls under reverse charge mechanism..a mfg co is entitled to claim credit of service tax deposited by them on behalf of transporters....CCR,2004 allows manufacturers to claim input service tax credit against their excise duty liability....though the service tax on transport services is deposited by the mfg co, even then mfg co is service receipient and service tax credit is allowed