Cenvat credit of tax paid during scrutiny

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Aniruddha Prakashkar (Querist)
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01 December 2015 Our client is a body corporate, who is required to pay Service Tax under Full Reverse charge for the specified services, which they didn't pay. During audit conducted by the department, it was discovered & they paid the tax plus applicable penalties. The question is, can the Company avail input tax credits of such tax paid ? Earlier neither tax was paid nor credit was availed.

Ashish Chaudhary

Ashish Chaudhary (Expert)
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02 December 2015 Rule 9 of Cenvat Credit Rules provides for document eligible based on which credit may be taken. There is bar on taking credit under clause (bb) of section (1) based on supplementary invoice when tax has become recoverable on account of suppression of facts/intentional evasion etc. When one pay penalty @ 15%, it means he is admitting liability under section 78 i.e. cases involving fraud/suppression etc.
Tax paid under reverse charge can be taken as credit under clause (e) based on challan through which tax is paid. There is no restriction in case of clause (e). hence, one may take credit of ST paid during departmental proceeding under RCM .