Refund of Unutilised CENVAT Credit under Rule 5B - Where is the Notification?
A significant change in service tax administration from 01.07.2012 is the partial reverse charge method introduced on certain specified services. Under this system, the service receiver has to pay the specified potion of the service tax and the service provider will pay the remaining portion. Since the liability of the service provider is only a part of the full tax liability, there is every possibility for accumulation of CENVAT Credit in service providers' accounts. This issue has already been identified by the department and the JS(TRU) letter dated 16.3.2012 says "In extreme situations the small service provider is also being allowed the refund of unutilized Cenvat credit if any, available with him. Suitable changes will be made in Cenvat Credit Rules, to this effect”.
They have kept their word and vide Notification No , Dated : June 20, 2012, a new Rule 5B has been inserted in the CENVAT Credit Rules, 2004 as under:
5B. Refund of CENVAT credit to service providers providing services taxed on reverse charge basis. - 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 Gazette.
Unfortunately, the job is not over yet and a Notification prescribing the conditions or procedures has to be issued under Rule 5B. But so far, no such Notification has been issued. It is now nearly fifteen months after the launch of partial reverse charge method and many assessees may be facing the problem of accumulation of CENVAT Credit under partial reverse charge.
Has the Board forgotten about this notification? And what about the problem of limitation?
We had raised the issue in - 30.11.2012 and - 26.10.2012 and also in CBEC may like to speed up issuing Notification under Rule 5B of CCRs