'CENVAT Roko' by Railways
P G James, a regular contributor of articles to our site has this to say -
Service Tax on transport by rail was introduced with effect from 1 st October 2012.
As per Rule 4A of Service Tax Rules, inter alia every person providing taxable service shall issue an Invoice, a bill or as the case may be a Challan and such Invoice, bill or challan shall be serially numbered and shall contain the following namely:-
(i) the name, address and the registration number of such person
(ii) the name and address of the person receiving taxable service
(iii) the description and value of taxable service provided or agreed to be provided; and
(iv) the service tax payable thereon
As per Rule 9(1)(f) of the CCR, 2004, CENVAT credit shall be taken by the manufacturer or provider of output service on the basis of an Invoice, Bill or Challan issued by a provider of Input service.
Only relaxation to the above provisions is to the Banking and Financial institutions wherein it is provided that Invoice, Bill or Challan shall include any document, by whatever name called, whether or not serially numbered and whether or not containing address of the person receiving taxable services but containing other information in such documents as required under this sub rule.
Railways, being Service Tax registrants are bound by the Service Tax provisions and are not relaxed from issuing a formal Invoice as per Service Tax Rules.
Vide their Rate Circular No 29/2012 dated 28.09.12 (No TCR/1078/2011/2) it has been clarified by the Deputy Director of Railway Board that customers can get credit of Service Tax based on the consolidated Certificate issued by an authorised Officer of Railway. The relevant extract of the Circular is reproduced below:
"xiii) On any written request from customers, CCM Office will issue a monthly consolidated certificate to be signed by an Officer authorised by CCM and duly countersigned by Dy.CAO/T or officer nominated thereto, for each customer giving details of Service Tax collected from them during the previous month, date-wise and rake-wise with break up of (a) Service Tax, (b) Education Cess, (c) Higher Education Cess and (d) Total Service Tax. This can be used by the customers for getting credit of Service Tax from the concerned Superintendent of Central Excise as due to them"
It needs mention that the consolidated Certificates are also not being issued at many places due to the reason that details are not obtained from the concerned Rail Terminals.
The first question that comes to mind is whether the Railway Board has the power to prescribe a document for taking CENVAT Credit?
Obviously, even if credits are taken on the basis of such "consolidated certificates", the CERA and Internal Audit groups are certain to raise objections and which would lead to litigation manifold.
Incidentally, during the MODVAT regime, it was clarified by CBEC that duty payment certificates issued by Public Sector Undertakings are valid documents for availing credit of Excise Duty.
It is, therefore, expected that the CBEC comes out with a clarification on the issue immediately.
The CBEC has already extended its New Year wishes to all the assessees in the form of the draconian Circular No967/01/2013-CX and the above issue is an icing on the cake for the department.
I am reminded of the following maxim: "Cujusest dare ejusestdisponere" - " He who gives anything can also direct how the gift is to be used."
Let us hope the Government will educate the assessees the manner in which they should go about to avail the CENVAT credit of Service Tax paid by Railways on the freight.
Is this too much that we ask for?
Railway Board Rate Circular No. dated 28.09.2012
Will the Board - CBEC (not Rail Board) Clarify?