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Service tax amount not shown in invoice

Rahul Jain (Accountant) (316 Points)

13 November 2013

Suppose a Service Provider has raised a Invoice for providing certain service but has not shown service tax amount separately in that invoice. Can the service receiver claim input service tax credit for amount paid to Service provider by back calculation(by assuming amount paid has service tax included)??

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12 Replies

Viswanathan.C.P (Manager-Finance and Accounts) (332 Points)
Replied 13 November 2013

It is justifed to take credit for the service tax paid thr reverse working.

The input credit can be taken and can be adjusted with the output service tax liability ie net paid by chq.

Regards,

CA Viswanathan C P

CA PRASAD KSHIRSAGAR (CA Practice ) (148 Points)
Replied 13 November 2013

Sir in my opinion, the service tax registration number is a necessary requirement for the input tax credit to be availed. So may be reverse working will do well but whether it will be accepted at the time of audit of the service tax working? We need this to test with the assessment of service tax proceedings as to what stand is taken by the service tax department.

CA PRASAD KSHIRSAGAR.

Sheena Maheshwari (ARTICLESHIP) (240 Points)
Replied 13 November 2013

Hi, rule 9 (Documents required) of cenvat credit rules specifically states that an invoice as per service tax rules is required and Rule 5A of service tax rules states that the amount of service tax must be separately disclosed in the invoice. Therefore, credit can be availed only if the bill of input service declares the service tax amount separately. The logic being: The purpose of giving credit is to avoid double taxation. But at the same time the govt has to receive the amount due to it. So, if the supplier of service has not shown service tax separately in his bill he wouldn't have paid it, thus the person purchasing the service will have to pay the entire tax and is not eligible for any credit.

3 Like

Anuj Mehta (Assistant) (221 Points)
Replied 13 November 2013

Yes. Must be shown separately. Agree with Sheena Service tax reg no. is not enough.. there are various schemes like composition scheme which require Reg... but input ST may not be available

praveen (Chartered Accountant) (6971 Points)
Replied 13 November 2013

It is preferred that the service tax amount is disclosed separately in the invoice. In case you receive an invoice which doesnt specifically state the amount of service tax collected but mentions the service tax number and the fact that "service tax is included" then reverse computation can be made and credit may be claimed. Again there is an inherent risk in doing the same. There could be abatements etc to be considered as well.

1 Like

rajkumar (student) (38 Points)
Replied 13 November 2013

I agree with sheena

CA PRASAD KSHIRSAGAR (CA Practice ) (148 Points)
Replied 13 November 2013

I agree with Sheena. Thank you.. Prasad

CA. Narottam Kumar Rawat (Indirect Tax Consultant) (394 Points)
Replied 13 November 2013

I agree with Sheena, Further, second proviso to Rule 9 of CENVAT Credit Rules is as under: Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, descripttion of the goods or taxable service, [assessable value,..........", he may allow the CENVAT credit.] Therefore, service tax must be shown separately in the Invoice to avail the CENVAT Credit.

1 Like

RAMA KRISHNA RAO GOPARAJU (PCS) (29 Points)
Replied 14 November 2013

i agree with Mr Rawat

1 Like

CA Vijay (Manager Finance) (110 Points)
Replied 15 November 2013

Service tax rules states that the amount of service tax should be be separately disclosed in the invoice. Therefore, credit can be availed only if the bill of input service declares the service tax amount separately.

The Dude (Specialist- Finance) (303 Points)
Replied 15 November 2013

I agree with the views above. The credit can be taken only if shown in the invoice. The only exception is in the case of Service tax on Reverse Charge basis.

Camille A Polycarp (Finance Professional) (21 Points)
Replied 03 August 2015

A question: In my invoice, if i have mentioned "Invoice" and my service tax component reflects in a separate column, prior to the final billing amount, "Is it mandatory to have 'Tax Invoice' mentioned in place of "Invoice"?
I have just been told that my invoice generated has to have "Tax Invoice" stated & not just simply'Invoice'. Please note, the Service tax component is stated clearly prior to the final total.

Please advice and clear my doubts.