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Service tax

RAM KRISH (Finance Manager) (36 Points)

24 September 2014

I have recently joined in a manufacturing company. Its just started commercial production. I have filed ER1 & ER6. The books showing input credits entries of Rs. 10 lakhs from April to step.14 and also books showing input credit if Rs. 25 lakhs up to March 2014. I have filed ER 1 & ER 6 without showing service tax. Service tax returns not filed so far. Please help what to do. Its urgent

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5 Replies

Rashmi (CA Final Student) (137 Points)
Replied 25 September 2014

Sir

Your entity is engaged only in manufacturing activity and does not provide any service. Accordingly, service tax registration is not required.

It appears that the input tax entries standing in the books of accounts pertains to service tax on input services. Such input service tax can be used to pay output excise duty liability. For this purpose, you need not obtain service tax registration.

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Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 26 September 2014

But keep in mind amendment by Finance Act 2014

which says input tax can be utilised against output tax only within a period of 6 months. So, w.r.f 01 september 2014, you will be allowed to utilise CCr of service tax paid for 6 month only.

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Rashmi (CA Final Student) (137 Points)
Replied 26 September 2014

Sir,

This is with reference to your message.

Refund Route

Refund under Rule 5 of CCR, 2004 is applicable where assessee is engaged in export of goods or services. If that is the case, then you may apply for refund as per method prescribed under the said rule. However, please note that claiming refund is a time consuming exercise.

Credit Route

As explained by you, you have Rs. 25L as credit upto March 2014 and Rs. 10L as credit for the period Apr-Sept 2014. For this, you need not file service tax return to claim this credit as this credit can be set off from output excise duty.

Now, ER-1 for Sept 2014 shall be filed by 10 Oct 2014. As per budget announcement, w.e.f. 01.09.2014, credit should be availed within 6 months from the date of invoice. Please note here that availment means taking into books of accounts. The budgetary announcement has restricted availment of credit not later than 6 months but has not restricted ultization of such credit in payment of output liability

Based on this, credit upto March 2014 and credit for the period Apr-Sept 2014 has been timely availed by your company. Accordingly, there is no problem in disclosing this credit in ER-1 to be filed for the m/o Sept 2014 and utlize it for payment of output duty liability.

For further clarity, you may submit a letter to the concerned authority citing that credit had been timely taken in the books but could not be disclosed in relevant returns and now the same is being displayed in current period return.

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RAM KRISH (Finance Manager) (36 Points)
Replied 30 September 2014

Dear Mdm!

Thank you very much for your valuable guidance.... I have got some knowledge in this regard, after reading your reply.

I had interaction with our Auditors regarding this. I have been informed that, before I join here, a Service Tax Return has been filed by our Auditors for the period up to March 2014. I have asked them for non-applicability of Service Tax Return based on your reply, since we are in manufacturing industry. They informed me that keeping in mind of Reverse Charge Machanism (RCB) they have filed Service Tax Return, so that our company can pay RCB.

Still, they are going to file Service Tax Return for the period from April 2014 to Sep.2014.

Then what should I do in ER-1 Return for Sep.2014?

Your further guidance is required in this regard.

Thanks in advance

-Ram

Rashmi (CA Final Student) (137 Points)
Replied 02 October 2014

Sir

Now that when you are liable to pay service tax under reverse charge mechanism (RCM), you shall have to file service tax returns.

However, as per explanation provided to Rule 3(4) of the CENVAT Credit Rules, 2004, a service recip[ient cannot utilize cenvat credit for making payment of service tax under RCM. Hence, you cannot show credit in ST return since you are not legally allowed to utilize the same.

A better presentation would be to show the credit balance in ER-1 and utilize it while making payment of output excise duty.

Sorry for the delayed reply.

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