20 March 2016
we are electrical contractor having Partnership firm falls under "erection & commissioning" we are working under a reputed mnc company as sub contractor. Regarding service tax we have raised a question to that company which is following: This is being a work order under service tax Category of "Erection, Commissioning and Installation" our client has charged service tax at the full rate as no abatement is applicable to service and no liability under Reverse Charge Mechanism.
Further our client have been asked to deposit the challan of service tax paid by the client to the department for the full amount that have been charged in the invoice raised on your company in order to release the payment of service tax.
We would like to clarify that during the execution of this work order we have availed certain services from other service providers also for which they have charged Service Tax and as per Cenvat Credit Rules our client can avail credit of Service Tax paid on such invoices.
"Now you are requested to please clarify how is it possible to pay the same amount of Service Tax as have been charged in invoice raised on your company in CASH as there is availment and utilisation of Cenvat Credit of service tax. This will lead to double taxation on our client which can ultimately result into heavy losses." where the concern company reply of our query is following:\ Pls. note that we will not be able to avail cenvat credit for the services recd. from entities/vendors against whom we have not issued / entered into works contract. In this case, for availing cenvat we need invoices of our sub contractor only and accordingly sub contractor has to discharge his liability towards the same.
Vendor can similarly claim cenvat credit for the services being provided to them by their vendors. here i want to know where we can avail cenvat credit or not and what is our exact service tax liability or we have to deposit full amount of service tax to concern department
20 March 2016
You can avail cenvat credit on inputs services, if you already paid full amount, you can adjust the same in next payment, you can not claim input credit more than six months if you not declared in ST-3
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