Cenvat credit

Hi,

Service tax on supply of manpower service is payable fully by recipient of service under Reverse Charge Mechanism if the following conditions are satisfied:

1. Service provider is any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory;

2. Service receiver is a business entity registered as a body corporate located in the taxable territory;

In all other cases, the service tax has to be by the service provider fully i.e 100%.

Assuming that in your case as a service provider, you are paying 100% tax,you can fully avail the CENVAT credit of the amount you pay to your sub contractor/consultants.Their invoice is enough for you to take the credit. You need not wait for your consultant to remit the same to government. It is not your obligation. So you can go ahead and take credit of service tax which is charged in the invoice provided by your consultant.

 

Regards

Bharath

I will try to answer, in bit technical terms:

Your Input Service is entitled for the credit, there is no doubt.

But the condition of Rule 4(7) of Cenvat Credit need to be taken care of which says, the service receiver needs to make payment within a period of three months from the date of Invoice. If you not make the payment then you need to reverse the credit you had taken.
Thereafter, you again entitled to take credit when you make payment.