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Refund of Cenvat Credit in case of Service Providers covered in reverse charge basis - Cenvat Credit - Ready Reckoner - Cenvat Credit

Refund of Cenvat Credit in case of Service Providers covered in reverse charge basis
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Chapter 11B

Refund of Cenvat Credit in case of Service Providers covered in reverse charge basis

Effective date: 1-7-2012

Statutory Provisions:

Rule 5B of the Cenvat Credit Rules, 2004

Notification No. 12/2014-CE (NT) dated 3-3-2014

Rule 5B-

A  provider of service 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


The Safe guards, conditions, limitations and procedure have been prescribed vide Notification No. 12/2014-CE (NT) dated 3-3-2014

The following service providers are eligible to claim refund under these provisions:

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

(iii) service portion in the execution of a works contract

The refund on renting of motor vehicle is available only if service provider is not availing abatement and charging service tax @ 50%.

The refund claim should be filed every half year in Form A.

Refund claim is required to be filed within one year from the due date of filing the half yearly return. Refund claim can be filed only after filing return for that half year.

Refund amount shall not be more than amount of service tax payable by the service receiver.

Refund of unutilized Cenvat credit will be granted in proportion of turnover of output service under reverse charge mechanism provided by service provider to the total turnover of goods and services provided by the service provider during the half year.

The amount of refund claimed shall be debited to Cenvat credit account while filing the refund claim. If actual refund sanctioned is less, the balance can be taken back as credit to Cenvat credit account.

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