Cenvat & service tax

CS SAJU PHILIP MANALEL (Company Secretary in Practise) (157 Points)

13 March 2014

A company engaged in the development of housing project has the following transactions

1. Received booking of flat A in Sep 2012

2. Service tax thereon paid by availing CENVAT credit available with him.

3. The same was shown in the Return for the period ended on 30th September 2012

4. The Booking of Flat A cancelled in the month of Jan 2013 and the entire booking amount with service tax repaid to the client in the same month.

Now my queries are :

a) whether Credit under Rule 6(3) of Service tax rules avaialble for this cancellation

b) if so, what should be the source document to be shown in the ST 3

c) Instead of taking the credit under Rule 6(3), shall the Cenvat utilised at the first instance on booking can be reversed on cancellation.

Please guide me

regards

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Vikas (CA) (1135 Points)
Replied 13 March 2014

Rule 6(3) of the STR has to be made application in this instance, as there is a deficiency in provision of service;
The source document shall be a credit or debit note, as the case may be;
Since, the provisions of Rule 6(3) are directly applicable, in my opinion, you shall not reverse the Cenvat credit paid amount for the same of convenience.