Cenvat credit for purchase of capital goods

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Querist : Anonymous

Querist : Anonymous (Querist)

23 June 2016 Our company imported capital good which is covered under chapter 85 and paid customs duty of Rs.1,22,780 (BCD Rs.34843, CVD Rs.62427, Additional duty on imports 22590 and cess 2917) in the month of July 2015 and we do not have service tax registration in that year later in the month of jan 2016 anticipating the sales of services we took service tax registration and filed nil return for that half year even where we did not mentioned any input tax paid in the month july 2015 and now in the month of may 2016 we raised a bill in which 4,49,500 is output service tax now do we eligible to claim CVD of Rs.62427 paid on capital goods as this is the second year and will have an option to claim the service tax paid in telephone bills for the year.

Arun Kumar Singh

Arun Kumar Singh (Expert)
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24 June 2016 Yes, now you can take the cenvat credit of capital goods but capital goods should be used in the providing output services.

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Querist : Anonymous

Querist : Anonymous (Querist)

28 June 2016 Thanks for the reply sir,
one more query do i eligible to claim the service tax paid on telephone bills, other professional and consultancy bills relating to 2015-16 now as cenvat credit

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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19 July 2024 Yes, you can generally claim CENVAT credit on service tax paid on telephone bills, professional fees, and consultancy services if they are used for providing taxable services or for business purposes. Here’s how it typically works:

### Conditions for Availing CENVAT Credit

1. **Service Tax Paid**: You must have paid service tax on these services during the period for which you want to claim the credit (in your case, the financial year 2015-16).

2. **Use for Business Purposes**: The services for which you paid service tax must be used:
- In the course or furtherance of your business,
- In providing output services (i.e., services on which service tax is leviable),
- For activities related to your business operations.

3. **Input Services**: Telephone bills, professional fees, and consultancy services are considered input services under the CENVAT Credit Rules. Input services are defined broadly to include any service used by a provider of output services for providing the output service or used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products.

### Documentation and Compliance

To claim CENVAT credit on these expenses:

- Ensure that the invoices or bills clearly indicate the service tax paid. You will need these documents as proof during audits or assessments.
- The credit can be utilized to offset your service tax liability on output services or other liabilities under excise or customs duties, depending on your business activities.
- The time limit for claiming CENVAT credit is generally within a certain period from the end of the financial year in which the tax invoice for input services is received.

### Practical Steps

1. **Verify Eligibility**: Ensure that the services for which you are claiming credit were indeed used for business purposes or for providing taxable services.

2. **Maintain Records**: Keep all invoices and documents related to the payment of service tax. These are essential for substantiating your claim during audits.

3. **Consult with a Tax Professional**: If you have specific questions or doubts about claiming CENVAT credit, especially regarding the timing or eligibility criteria, it’s advisable to consult with a tax advisor or Chartered Accountant. They can provide guidance tailored to your specific circumstances and ensure compliance with tax laws.

By adhering to these guidelines and ensuring proper documentation, you can effectively claim CENVAT credit on service tax paid on telephone bills, professional fees, and consultancy services for the financial year 2015-16.