Credit of Service Tax Paid on Input

This query is : Resolved

CA HANI (Querist)
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17 September 2009 The assessee is having sales both kind of products / services, out which few are liable to service tax and on other there is no service tax only VAT / CST is payable .

The Assesee is having common pool of resources and Input Service which are being used for all the service .

Whether the assessee will get full set off of service tax on all the Input Service or it will be allowed only for those input service which have been used for out put service on which service tax is payable .

Will it make any difference if the assessee has done export of serice tax liable service and charged nil service tax on export of services as it nil in case of export

Shyam Lal Naik

Shyam Lal Naik (Expert)
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18 September 2009 It appears from your query that the assessee is engaged only in the following two kind of activity.

1. Provision of taxable services
2. Trading in goods, liable to VAT / Sales Tax.

The assessee is not engaged in provision of non-taxable service and / or manufacturing of exempted products.

In the above situation, the assessee is entitled to full set off, as the service is not utilised for providing exempt service and / or manufacturing of exempt goods.

It may be emphasised that, trading activity is neither provision of service, nor manufacturing.

In my view, entire is available, unless the input service is used exclusively for trading activity.

Since the query is not free from controversy, please seek more opinion.

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)
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21 September 2009 You can utilize input services towards providing taxabl oupt services only if the inputs are used in relation to output services. Further, if you exported taxable services then you can go for refund of input service tax if you are unable to utilize input service tax.

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