Credit availability of the service tax already paid, Service Tax

[Shekhar kapoor]

If the receiver of service has paid service tax to the service provider and after payment it is known that the service received was not taxable at all then whether the service receiver can avail credit of the service tax paid. Issue arise since department says that service tax credit of the same is not available.

Posts / Replies

[Paramjit]

first of all one should know whether it is your input service ?

[S Gupta]

In your case, if you are sure that you have paid service tax in error and it was not leviable of services provided by you, you can get the refund the service tax paid in error from the department.

[Brijesh C Verma]

Legally speaking, the department is correct while taking its stand. Rule 3 of the CENVAT Credit Rules 2004 clearly uses the words that a manufacturer or producer of final products or a provider of output services shall be allowed to take credit of the ............. ...... ..... (ix) the service tax leviable under section 66 of the Act. If a legal view is taken in this regard, the amount in question is not any 'SERVICE TAX' that has been paid by you. Rather it is an erroneous cvharge of tax by the services provider. It is therefore, advisable that the receiver of service must lodge a refund cliam in respect of the amount erroneously paid. The refund claim should not be lodged by the service provider as it would be a case of 'Unjust Enrichment'