Cenvat credit of gta

Page no : 2

amit patil (Industrial Trainee) (33 Points)
Replied 06 December 2013

cenvat credit allowed as it is input service to u.

but u cant utilise cenvat credit while payment under revrse chage

i.e.u have to pay service tax under reverse charge in cash

and avail cenvat credit on the basis of GAR-7 challan

Upgrade to CAclubindia Pro. Subscribe Now!

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 06 December 2013

This is an old query but the question and confusion still remains in the minds of many assessee's. So i am expressing my views, to the best of my understand.

1. If the person liable to pay freight is a factory, body corporate, society, co-operative society, registered dealer under central excise, partnership firm whether registered or not or AOP, then due to reverse charge (N/N-30/2012), service tax shall be paid by the service receipient. Otherwise, by the GTA itself.

2. The abatement of 75% is available to the person who pays tax, if the GTA has not taken cenvat credit on inputs, input services or capital goods for providing such GTA service. (N/N-26/2012)

3. In case of payment under RCM, tax must be paid in Cash i.e. though GAR-7 Challan and not by utilizing the cenvat credit balance.

4. After making the payment on 25% value (i.e. after abatement) AND after payment of freight to GTA, cenvat credit is available on the basis of GAR-7 Challan, if the GTA service is otherwise eligible is 'input service'.

5. As per Rule 2(l) of CCR, 2004 input service includes inward transportation and freight paid upto the place of removal as defined in the cental excise act, 1944.

For more details on GTA, you may follow the link below, where i have tried to cover most of the aspects related to GTA.

https://www.simpletaxindia.net/2013/11/service-tax-on-good-transport-agency.html

Regards,

Manoj Agarwal

E:Mail: servicetaxexpert @ yahoo.com