Availing input credit against different categories

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 October 2012 Hi all. Company A is registered under three cateories viz. Manpower Recruitment agency(MRA), Management Consultant(MC) and Business Auxilarry Service. The legal entity has single registration number with the above categories. Different divisions provide different service, due to which the above categories were registered. As on 31st MArch, one division of manpower recruitment was discontinued. However, they have huge Service tax input credit. Please confirm if the Management Consultant Division can avail the input credit of MRA in the subsequent years. If so, then under which Rule or section.

An Early response would be appreciated

CA SHRINIVAS

CA SHRINIVAS (Expert)
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03 October 2012 Dear Author,
If the input services on which you have service tax credit were utilised for all 3 business streams then you can utilize the unused credit of Service tax.
If the input credit is specifically related to shutted down activity then also you can claim the benefit but the onus lies in you to prove to the Central Excise department that the said credit is allowed as the same was accumulated for the purpose all 3 business.

Querist : Anonymous

Querist : Anonymous (Querist)

03 October 2012 Thanks Shrinivas for quick response. However, there is input credit availble in the other 2 categories as well. The question was more in line with accounting. Can we carry forward the unused portion of closed division in our balance sheet. Auditors will allow to keep this in balance sheet only if Service tax authorities can give credit utilisation. The argument is that Since the output service of continuing division is different from that of closed one. Hence the input credit for Closed division cannot be availed by continuing division.

Request if you could quote the section or rule number

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CA SHRINIVAS

CA SHRINIVAS (Expert)
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03 October 2012 Please go through the Rule 10 of Cenvat Credit Rules 2004, Service Tax and Cenvat Credit rules operate the same way in this regard.
Thanks.