19 February 2012
One of our clients, a multinational manufacturing concern is having a regional office in Kolkata. It's manufacturing plants are located in Western and Northern India. It is paying service tax to the landlord of the regional office in Kolkata. Please let me know at the earliest if it would be possible for them to claim CENVAT CREDIT on Input Service??? As per the opinion of one of their finance executive, they cannot claim CENVAT CREDIT since they are not using the regional office for manufacturing. It is just an administrative office. In my opinion they can claim CENVAT CREDIT as Rule 2(1) of the CENVAT CREDIT RULES, 2004 "Input Service" means any service- (ii) used y any manufacturer, whether directly or indirectly, in or in relation to the- - manufacture of final products -clearance of final products upto the place of removal and includes service in relation to- advertisement or sales promotion, market research, accounting, financing, share registry, legal services, etc."
The above text is an abridged version. Kindly reply as soon as possible as a pending issue has to be sorted out at the earliest. Thanks in advance.
19 February 2012
Since excise credit on any assets (eg. office appliances) used in office premises other than of factory is not available, service tax credit on rent of office premises (non-factory) may not be available applying similar logic.
20 February 2012
Service tax credit is restricted to the specified list of services. No other services are included in this list effective from 1st April 2011.
Since as per the reading of the question, it does not fall under the purview of the definition, hence no credit will be available
20 February 2012
See whether you are performing any marketing activities also from that office. Whether you have client base at that location. If yours sales are getting effected if the regional office is closed. If answers to all these questions are "Yes", then you have very positive & winning case for taking cenvat.
In service tax it is not necessary that there is any direct relation between any expense and manufacturing. As you may see in the "includes" clause all those activitties which are necessary to convert your finished goods into sales are covered in cenvat ambit. If you take a very strict view of cenvat elegibility then tell me how accounting, auditing, legal service are elegible for cenvat credit. You can do manufacturing even if you are not getting accounting & auditing. The definition only begins with "activities relating to business such as ____" Thus in definition is illustrative only. Any activity relating to business is elegible.
CAclubindia
