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CENVAT Credit in case of GTA

CA Amit Jaiswal (Finance Manager) (2720 Points)

10 February 2010

In case of GTA service, Service tax is payable by the person paying the freight.

Is the payer entitled to CENVAT Credit paid on freight inward?????????

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11 Replies

CA Pranjal Joshi (CA) (331 Points)
Replied 10 February 2010

Hi,

In my opinion, the amount of service tax paid on freight shall be available as cenvat credit for payment of any duty of excise on final product or service tax on any output service.

But pl. note that such service tax paid on freight can not be allowed as cenvat credit for service tax payable on other freight payable by the consignor or consignee as GTA is not a output service for him.

GTA remains to be an input service for him, but because of reverse charge mechanism consignor or consignee becomes "person liable to tax" and hence tax must be paid in cash.

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 11 February 2010

I agree.

The payment of service tax on GTA has to be done in cash (i.e. cenvat credit cannot be utilised as it is not an output service) but once tax paid, it can be taken as credit as it is an input service.

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CA Pranjal Joshi (CA) (331 Points)
Replied 11 February 2010

Hi,

Yes, it will allowed as cenvat credit only for payment of any duty of excise on final product or service tax on any output service & not for payment of service tax for other GTA

CA Amit Jaiswal (Finance Manager) (2720 Points)
Replied 11 February 2010

what will be the case if i am not a service provider.

I am paying service tax on GTA only. i.e. only a service receiver not a service provider.

CA Pranjal Joshi (CA) (331 Points)
Replied 13 February 2010

Hi,

You will be entitled to cenvat credit only if you are the provider of taxable service or manufacturer of dutiable goods. otherwise you will be treated as consumer and tax has been collected from you as it is an indirect tax.

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CA Amit Jaiswal (Finance Manager) (2720 Points)
Replied 16 February 2010

Thanx to all of U

Jayesh K Deokar (ACCOUNTS EXECUTIVE) (26 Points)
Replied 12 August 2011

@ Mr. Pranjal Joshi

Thanks for simplifying the things.

But I still have a confusion. When we go through the definition of Input Service, we come to know that credit can be taken on outward transportation "up to the place of removal".

Does it imply that the GTA Service Tax paid on the outward transportation is not eligible to be taken /and utilised as Cenvat Credit for the payment of Excise duties?

Pls. clarify.

Regards

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 13 August 2011

when the goods are cleared under excise rules at factory gate, then input credit on outward transportation service tax is not available, as it does not qualify as input service

any service availed beyond the point of sale is not an input service for cenvat credit purpose.

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CA Saiyum khan (Practicing CA) (690 Points)
Replied 14 August 2011

If place of removal is other than the factory gate then the service tax paid on outward freight up to the place of removal would be eligible for cenvat credit.

2 Like