We are registered as Input Service Distributor and We are generally Receiving following service. i want to know of which input service cenvat can be aviled following are the services.
1) Rent a cab Services - Generally for Visitors,visit to other places like other branches, customer office etc and Car used for office use for which under reverse charge we are paying service tax.
2) Legal Consultancy Service- we are having some cases about income tax and other taxation matter with high court and other courts for which lawyers are been hired and for which under reverse charge we are paying Service Tax can we avail the Cenvat of the same
3)we are having contract with one of the manpower agency for driver for the cars of VP, directors and other higher level management personnel for which under reverse charge we are paying service tax. can we avail the cenvat of the same.
4)we have given Works contact for some of the factory building reparing which are of current nature and some contract related to new factory building purposes can we avail the cenvat for that services.
5) can we avail the Service tax credit for the service of Repair and maintenance for cars which used by the managerial personnel
please provide the notification for reference purposes
17 October 2013
Reverse Charge Mechanism was introduced in Finance Act 2012, extending the coverage to more services against the earlier two services of GTA and Courier Services. Notification No.30/2012 dated 20th June 2012 extended the reverse charge mechanism to cover ten services. Subsequently an amendment was made by Notification No.45/2012 dated 7th August 2012 to include the 11th service Services rendered by a Director to his Company. Notification No.26/2012 dated 20th June 2012 further provides for services on which abatement is available, the percentage on which service tax is payable and conditions for enjoying the abatement by the service provider. Reverse Charge Mechanism for payment of service tax by the service recipient only transfers the liability to collect and remit service tax from the service provider to the service recipient. The nature of service provided and the abatement does not vary. Entry No.9 of Notification No.26/2012 reads as under:
9 Renting of any motor 40 CENVAT credit vehicle designed to on inputs, carry passengers Capital goods and input services, used for providing the taxable service, has not been taken under the provisions of CENVAT Credit Rules, 2004.
Therefore, under the provisions of this notification no CENVAT credit can be availed of by the Service Recipient for payment of service tax under the Reverse Charge Mechanism for Rent- a - Cab Services. Hence no CENVAT credit can be availed of against item no 1 of your query.
Please refer to another query answered by me earlier today regarding availing of CENVAT credit on tax paid under reverse charge mechanism for services rendered by directors. The requirements for Input Service and Documentation required are same and hence CENVAT credit can be availed of against service tax paid under reverse charge mechanism on Legal Consultancy Services. (item no.2 of your query)
As I understand it, item no.3 of your query pertains to an agreement with a manpower agency to provide drivers for your various cars - owned or hired. The service rendered is of Manpower Supply and you are paying service tax on 75% of the service bill while the service provider is paying the balance service tax on 25% of the service bill. Since no abatement is being availed of, no conditions apply and you can avail of the service tax paid under reverse charge mechanism as CENVAT credit input.
18 October 2013
Rule 2(1) of CENVAT Credit Rules,2004 defines Input Service. As amended w.e.f. 01-04-2011 it specifically excludes service portion in execution of works contract and construction services including services listed under clause (b) of Section 66E of the Finance Act, 1994 (specified services) in so far as they are used for : "construction of office or factory of manufacturer or service provider as the case may be OR foundation or structure work for capital goods to be used by manufacturer or service provider"
Hence no CENVAT Input Credit can be availed on construction service of new factory. By extension the Department may deny CENVAT Credit on services of repairs to factory buildings.
However CESTAT Bombay in the case of Jyoti Structurals vs. Commissioner of Service Tax has held that there is no necesssity of one to one relationship in availing of CENVAT credit on inputs. This decision was passed in October 2012 but till date the Department has not filed an appeal against this decision, even though the date for filing appeal expired in February 2013. Accordingly services of repairs to factory buildings are repairs and maintenance services and are eligible as input services.
Subject to the above referred paragraph, Input Credit on Works Contract of Construction of new factory buildings cannot be availed
Input credit on repairs and maintenance of factory buildings can be availed based on the CESTAT decision in Jyoti Structurals case.
With effect from 01.04.2011 no input credit can be availed on repairs and maintenance of motor vehicles even if used for business purposes as it has been specifically excluded from definition of Input Service.
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