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Service Tax Credit

ajay garg (Service) (74 Points)

19 November 2007

Dear All.

My contractor was not registered under service tax as Site Formation, Clearances and ......Etc which was effective from 16.06.2005. Now the service tax department is perusing him to depoit the amount for previous period.

Please help me in the below matter please;

(a) If our contractor deposit the amount and raise a bill on us then in such situation, we can avail the service tax credit??
(b) If suo moto, he is depositing the amount, is he liable to pay the interest or not??? As per my opinon, before issuance of SCN, if any person deposit the service tax amount which was not paid/short paid, is not liable to pay the interest on the service tax amount.

Kindly advise please.

Regards
Ajay Garg

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3 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 20 November 2007

You can claim cenvat credit on the basis of bill/supplimentary bill raised by contractor. Suo moto payment of tax before scn does not immunate from penal provision. But the fact will be considered by the autorities for waiver/reduction of penal interest.

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Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 20 November 2007

If any service tax is paid by the service provider arising out of suppression of facts, willful mis statement, fraud, collusion etc., the service tax paid by him based on the adjudicating order will not be available as credit to the service receiver.

In the matter of detection , if service provider pays the service tax thereon, there are every chances that it may not be allowed as credit since it is not a element of tax.

You may take the credit but ensure to seek a undertaking from the service provider, that if for any reason we are forced to reverse the credit then the same shall be recovered with interest from him

(Guest)

We are utilizing the Cenvat Credit at the time of service tax payment but i have doubt in Cenvat Credits, Which credits can be utilized? Commonly capital goods Cenvat Credit utilized but in my organization we are taken the expenses of Telephone, Courier, Professional Fees, Consultancy Charges, Traveling Charges, etc., this are eligible for Cenvat Credit? Please advice me for correct payment of Service Tax.