Service tax input

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2014 Dear sir,

We are the Trader (First stage dealer).

We are importing the goods from japan and selling the goods in India and we are providing the (Installation, Repair & Maint. and Training service also in India and we are paying the s. tax @ 12.36%.

We are taking the import and clearing, transport services from C.H.A and they are also charging SERVICE TAX.

NOW the question is can we take the Input from

Annu Agarwal

Annu Agarwal (Expert)
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10 July 2014 You can take credit of the servicetax paid to CHA provided you need to prrove to the department that the services were used for providing output services of installation,Repair & Maintenance.

Querist : Anonymous

Querist : Anonymous (Querist)

16 July 2014 As per last discussion, we should not avail the service tax input on the behalf of CHA service but I discuss with some friends and according to them there is some way for taking the Service tax input on the behalf of CHA services.

A) U/s 2 (i) Cenvat Credit Rule 2004
B) U/s 2 (f) Excise Manufacture Definition of 1st Stage dealer.

Now please finalize.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Thanks for sharing the details. Here’s a clear explanation based on your query about **taking service tax input credit on Clearing and Forwarding Agent (C.H.A) services** for a first stage dealer providing installation, repair & maintenance, and training services.

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### Key Points:

1. **Who is eligible to take Cenvat Credit on Service Tax paid to CHA?**

* According to **Rule 2(l) of Cenvat Credit Rules, 2004**, input service means any service used by a provider of output service for providing such output service.
* Your business is **providing taxable output services** like installation, repair, and maintenance, which attract service tax.
* The service of clearing and forwarding agents (CHA) is an **input service** if it is used for providing output taxable services (installation, repair, etc.).

2. **Is a first stage dealer allowed to take credit?**

* Under **Section 2(f) of the Central Excise Act, 1944**, a first stage dealer is defined as a dealer who purchases excisable goods for resale without any further processing.
* Generally, **first stage dealers are not manufacturers** but can be service providers if they provide taxable services.
* Since you are also providing taxable services (installation, repair & maintenance, training), you are **eligible to take input credit** on CHA services used for these output services.

3. **Regarding CHA service tax credit:**

* If CHA services are directly related to your output taxable services (installation, repair, maintenance, training), then you **can avail credit of service tax paid to CHA**.
* However, if CHA services are used only for trading activity (which is not taxable service), credit **cannot be claimed** for that portion.

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### References:

* **Rule 2(l), Cenvat Credit Rules, 2004** – Definition of input service.
* **Section 2(f), Central Excise Act, 1944** – Definition of first stage dealer.
* Circulars and Board clarifications on credit of CHA services when used for output taxable services.

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### Conclusion:

* You **can take credit on service tax paid to CHA only to the extent it is used for providing your taxable output services** (installation, repair, maintenance, training).
* You **cannot claim credit** for CHA services used purely for trading (importing and selling goods without further processing).

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Would you like me to help draft an official note or further help on how to maintain documents to support the credit claim?

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