Cenvat on hired vehicle

This query is : Resolved

Badarudeen (Querist)
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29 March 2015 we have hired cars on contract with the registered owners of the vehicle for the use of business and paying reverse charge @40%. The CENVAT credit taken on the reverse charge paid was objected by the Audit team on the ground that it is available only to those who are engaged in transportation service like fleet owners. Plz explain.

CA ANILKUMAR B.COM FCA DISA

CA ANILKUMAR B.COM FCA DISA (Querist)
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29 March 2015 Yes, the Audit team is right. Once service tax is paid under reverse charge, credit cannot be availed on these services received because of the restrictions put in the definition of ?input service? under CENVAT Credit Rules, 2004. The provisions of reverse charge is not applicable if the service provider and receiver are in similar line of business.