Cenvat credit for payment of service tax on professional fee

This query is : Resolved

yogesh vijaykumar shah (Querist)
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15 October 2011 Suppose A Co Ltd carrying on the business of earning income from renting of immovable property. For this, company charges service tax to the persons to whom the property is given on lease. Accordingly, company collects and pays the service tax regulary every month. If The company makes the payment of professional fees to the Income Tax consultants / Auditors. While paying the service tax on rent, can the company claim the cenvat credit of the payment of service tax on professional fees. Please advise us.

PAWAN KUMAR

PAWAN KUMAR (Expert)
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15 October 2011 You may take cenvat credit of the service tax charged by the auditors/consultants on their profession fee, as it comes under the purview of input services. Secondly you may also set off this cenvat credit against your liability of service tax on rent.

CA Prashant Shrivastava

CA Prashant Shrivastava (Expert)
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15 October 2011 Yes you can take cenvat credit while paying your ST Liability. You should also ensure that the payment you made to professional against a valid bill/invoice containing bill/invoice no., service tax regn. no. and amount of service tax charged. Further, as per Cenvat Credit Rules, 2004 you are required to maintain the Cenvat Credit register containing the details of input service tax e.g date of invoice, date of payment, St regn no., Nature of service, Name of Service provider, Bill amount, Service tax amount etc.

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Yash Anandkumar Mandavia

Yash Anandkumar Mandavia (Expert)
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15 October 2011 Dear Yogeshbhai,
In my humble opinion, credit of ST on professional charges paid cannot be availed. I analyse the situation as under.

Suppose you have paid to architectural charges along with ST to architecturer in designing the property, that becomes an input service. Now the ST paid to architecture can be claimed as credit against this Rent ST liability.....

CA Prashant Shrivastava

CA Prashant Shrivastava (Expert)
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16 October 2011 In the instant case, it seems that the services of Tax Professional has been taken for the purpose of assessee's business as such Cenvat Credit can be claimed irrespective of the nature of the Input Service Tax. In Cenvat Credit Rules, 2004 there is no such type of restriction that you can claim only Cenvat Credit of the services of same nature. The only restriction is that it is to be used for the purpose of assessee's business.