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Input on reverse charge

Ritu Varshney (Article) (113 Points)

19 March 2013

My Query is ...

If a company pay service tax on GTA Service under reverse charge after aviling abatement....

Can Company can take Credit of service tax paid..????

because the condition with abatement is provider of service can not take credit of service tax paid on input, input service, and capital goods used for providing output services.

but company is service receiver and paying service tax under reverse charge..

pls suggest me..

thanks in advance.

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5 Replies

SAGAR (ARTICLED ASSISTANCE) (236 Points)
Replied 19 March 2013

Dear Ritu,

A company can take input credit on service tax paid on GTA services.

The given condition is also applicable. ie if a company pays ST on Frieght Charges on purchase of material, than that input credit a company can avail. But If a company pays ST n Frieght charges on sales of goods/material then that ST we can't take Input credit.

Example:

1. ABC ltd paid 10000/- to ram kumar for the freight charges on purchase of goods From sellers warehouse to factory/ware house of ABC ltd. Then ST payable is 10000*0.25*12.36% (Input credit of service tax available)

2. ABC ltd paid 10000/- to rames kumar for the freight charges on sale of goods from factory/ware house of ABC ltd to buyers place then ST payable is 10000*0.25*12.36% (Input credit of service tax available)

In the above example no 2, we delivery the goods as per the buyers wish, so it's a service rendered was a output service. So on this ST Input credit we can't avail

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Ritu Varshney (Article) (113 Points)
Replied 19 March 2013

Sagar what about the conditiong for availing ababement???

SAGAR (ARTICLED ASSISTANCE) (236 Points)
Replied 19 March 2013

Condition for availing abatment on Frieght charges paid is

The service provider should not availe input credit on services or capital goods which were used to provide output services.
The above is declared in the consignee note/ Invoice. (just like Pan no)

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 20 March 2013

Dear Ritu,

In my view, if the company is liable to pay freight, then as per notificaiton no. 30/2012 (reverse charge), the company is liable to pay 100% of service tax @ 12.36% and the abatement available vide notification no. 26/2012 is not available as it is available only to service provider.

Once the company pays service tax, it can claim credit for the same on the basis of GAR-7 challan.