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Rule 4(7) of cenvat credit

SUBHASH CHAND (Partner at S.C.N. & Company) (55 Points)

29 September 2015

In case of reverse charge mechanism, ccr can be taken on payment of service tax only. But is such credit need to be paid back if payment of value of service not made within 3 months by applying second proviso of rule 4(7)?

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2 Replies

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 30 September 2015

The second proviso to 4(7) sets out that as far as ST paid on RC is concerned, even if payment not made to service provider, credit need not be reversed.

However for credit on service providers invoice, while credit can be availed immediately on receipt of the invoice, the credit needs tobe reversed if the payment to SP is not made.