Refund of unutilized Cenvat credit to Service Providers providing services under Partial Reverse Charge Dear Professional Colleague, Refund of unutilized Cenvat credit to Service Providers providing services under Partial Reverse Charge Background Partial reverse charge mechanism has been introduced w.e.f. July 1, 2012 wherein both service provider and service receiver are required to pay a specified portion of service tax liability in terms of Notification No.30/2012-ST dated June 20, 2012. Since, the Service provider pays only a part of the full Service tax liability under Partial reverse charge mechanism, there would be accumulation of Cenvat Credit in the hands of service provider. In view of above, Rule 5B of the Cenvat Credit Rules, 2004 (“the Credit Rules”) was inserted vide Notification No. 28/2012-CX (N.T.) dated June 20, 2012 which provided that a service provider providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette. Notification 12/2014-Central Excise (N.T.) dated March 3, 2014 The Central Board of Excise & Customs vide Notification 12/2014-Central Excise (N.T.) dated March 3, 2014 (“Notification No. 12”) has now provided the procedure for filling refund application by service provider, of unutilized Cenvat credit availed on inputs and input services received on and after July 1, 2012 for providing the following services (“the partial reverse charge services”): i. renting of a motor vehicle designed to carry passengers on non-abated value, to any person who is not engaged in a similar business; ii. supply of manpower for any purpose or security services; or iii. service portion in the execution of a works contract For the purpose of Notification No. 12, refund shall be calculated as follows: Unutilised CENVAT credit taken on inputs and input services during the half year for providing the partial reverse charge services = (A) – (B) Whereas, A = CENVAT credit taken on inputs and input services during the half year (*) Turnover of output service under partial reverse charge during the half year _____________________ Total turnover of goods and services during the half year B = Service tax paid by the service provider for the partial reverse charge services during the half year; For the full procedure, safeguards, conditions and limitations, please click the below link for Notification No. 12:
Posted on: Thu, 06 Mar 2014 06:39:37 +0000