Whether cenvat credit allowed??

accrding to me u can take credit of amount deposited by you under reverse charge 

No, wef 01.07.2012 vide Notification 2/2012-CE(NT) dated 20.06.2012 an explaination has been inserted in sub rule (4) of Rule 3 whereby it has been clarified that "CENVAT credit cannot be utilised for payment of service tax in respect of services where by the person who is liable to pay service tax is service receipient ; The assesse has to pay such tax by utilizing cash not cenvat crdit becoz for him such service will remain input service and not as output service.

Dear Parmita, it is not a question of whether cenvat credit can be utilised to pay service tax liability which arises as a result of reverse charges mechanism. It is actually a question of whether cenvat credit is allowable on service tax paid under reverse charge mechanism as a service recipient .

As long as the service tax amount pertains to input services, the amount so paid is allowed as input credit.

Input services is defined as follows.

Rule 2(l) of Cenvat Credit Rules (as effective from 1-4-2011), defines ‘input service’ as follows –

 

“Input service” means any service, -

 

(i) used by a provider of taxable service for providing an output service; or

 

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

 

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legalservices, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

Sir if you read the question above he is asking for whether he can take the cenvat crdit of telephone expenses against service tax liability under reverse charge. He is not providing any output service.

Service Tax paid on Telephone expenses and professional fee can be taken as input credit on qualifying as input serives but this input credit cannot be utilised for payment of Service tax liability which arises out of reverse charge mechanism..

Yes dats what i wanted to say,,,

agreed, iam saying that we can take credit of amount paid under reverse charge . i misundersatnd the question

not allowed, those services which are used for providing output service are only eligible for cenvat credit. simple logic is that if the above situation is broken, government will not get any service tax.

I think the question is limited to extent whether he can take Credit of S.Tax paid for service as receipient and not how the same can be utilized. Possibly his company may be providing other output service or may be a manufacturer but this aspect is silent in the question.

The answer to limited question is yes, subject to definition of "Input Service" given at Rule 2(l) of Cenvat Credit Rules'2004 and initial Main/Inclusive part is already given by Sh. T.Zameer but without exclusion clause wherein some Service is specifically excluded, though the same service covered in Main or Inclusive part of the definition.

Adding...Central Government has amended the definition of ‘input service’ under Rule 2(l) of Cenvat Credit Rules, 2004 vide Notification No. 3/2011 – CE(NT) dated 01-03-2011 and again vide Notification No. 18/2012 – CE(NT) dated 17-03-2012 (w.e.f. 01-04-2012). The effect of the amendment is that rent-a-cab service has been specifically excluded from the definition of ‘input service’ and hence cenvat credit is generally not available  as mentioned in question

Hi.

I hv limited practical knowledge in CENVAT. But my question is if there is no OUTPUT ST or EXCISE DUTY, where comes the question of claiming input cr? In such a case if you claim input either as rev charge or by payment in cash, does it mean govt will refund the money?

If there is no OUTPUT ST or EXCISE DUTY, Input credit can not be availed. Only in case of finished product/output service is taxable but service tax not paid for the reason of export, input credit can be availed and accumulated credit can be refunded.