11 October 2014
under RCM a company is liabile to pay service tax on rent a cab service which is on 40%(60% abetment) of the Value.
Now the Question is this that- Can I take CENVAT Credit of this Tax Payment because in In Abatement Notification there is Condition of 'not taking Cenvate Credit of Inputs & Capital Goods, Input servicee USED FOR PROVIDING THE TAXABLE SERVICES'
Does this condition is only for service provider...?
First of all after 01.10.2014 the liability to pay service tax under partial reverse charge mechanism is 50:50 in case of rent a cab service. (Please refer to notification no. 10/2014-ST dated 11.07.2014)
Secondly, the abatement notification i.e. 26/2012-ST imposes restriction only on service provider as it is providing benefit to them only. Therefore, it do not restricts service receiver in any way. BUT, rule 2(l) of the Cenvat Credit Rules, 2004 prohibits CENVAT credit on input services by way of renting of motor vehicle.
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