Service Tax on Rent or Business Auxillary

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umesh_mishra16 (Querist)
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14 December 2007 Our company is installing LCD screens in Mall & Multiplex. The owner of the Mall/multiplex is charging service tax on rent for installation of LCD Screens, which is registered under different categories i.e. construction of Complex, Business Auxiliary services, Exhibition Services, Franchise Services etc.

Whereas in the last budget service tax is extended to Renting of Immovable Property.

My question is ......Will we will be eligible for set-off even in case the owner of the property charges us service tax under a wrong categories ?

R.V.RAO

R.V.RAO (Expert)
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14 December 2007 SERVICE TAX CREDIT RULES 2002 ARE PROVIDED IN TEXT OF NOTIFICATION NO 14/2002-SERVICE TAX DT 1 ST AUGUST 2002
AS AMENDED FROM TIME TO TIME.
RULE 3 (1) PROVIDES THAT AN OUTPUT SERVICE PROVIDER SHALL BE ALLOWED TO TAKE CERDIT OF SERVICE TAX PAID ON INPUT SERVICE IN THE FOLLOWING MANNER.
"WHERE THE INPUT SERVICE FALLS IN THE SAME CATEGORY OF TAXABLE SERVICE AS THAT OF OUTPUT SERVICE ,SERVICE TAX CREDIT( STC) SHALL BE ALLOWED TO BE TAKEN ON SUCH INPUT SERVICE FOR WHICH THE INVOICE OR BILL OR CHALLAN IS ISSUED ON OR AFTER 16 TH AUGUST 2002"
IN ANY OTHER CASE STC SHALL BE ALLOWED ...ON SUCH INPUT SERVICE FOR WHICH BILL OR INVOICE OR CHLLAN IS ISSUED ON OR AFTER 14 TH MAY 2003.
TWO SERVICES SHALL BE DEEMED TO BE FALLING IN SAME CATEGORY OF TAXABLE SERVICE IF THE INPUT SERVICE AND OUTPUT SERVICE FALL IN SAME SUB CLAUSE OF CLAUSE (105) OF SECTION 65 OF THE ACT.
SO UNLESS INPUT AND OUTPUT SERVICES FALL IN SAME SUBCLAUSE AS SAID ABOVE IT IS NOT POSSIBLE FOR SETOFF.
R.V.RAO

Shyam Lal Naik

Shyam Lal Naik (Expert)
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16 December 2007 It is clear from the rule quoted by Mr. Rao, it is not necessary that the the input or output services should in the same catagory on or after 14th May'2003. More over Cenvat Credit has been allowed across goods and services w.e.f. 10.09.04. Hence there is no problem in taking credit even if the the services fall in different catagories.

The requirement for taking cenvat credit are:
The service should be a input service
There should be a invoice containing prescribed particulars
The amount should be paid before taking credit
As such, in my opinion, cenvat credit can not be denied, even if charged under a wrong catagory.

Moreover, Cenvat Credit Rules is a beneficial piece of legislation and a liberal construction is called for.

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