Shilpi Saxena (Functional Consultant) (28 Points)
14 December 2011I need to understand how excise affects the accounting of construction companies. Whether they can claim any set off on excise duty paid at the time of purchase of raw materials. If yes, how ? Also, what are the mandatory records they should maintain in case they are eligible for set off.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 15 December 2011
Shilpi,
Construction does not amount to Manufacture. Hence there is no requirement ot pay Excise duty. Therefore CENVAT Credit is not available to be set off against Excise duty payments. You have to treat Excise duty paid on inputs as a part of you material consumed. By doing this you will get some Direct tax benefit only. Give some details about the activities carried out by you for more specific suggestions.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 15 December 2011
I would like to add some more information on above.
As per my knowledge Commercial or industrial construction and Construction of complex are taxable service & Service Tax is required to be paid. In case you are paying Service tax on the value of taxable service provided by you, without availing the benefits of abatement scheme, you may utilise CENVAT Credit as per Rule 3 of Cenvat Credit Rules, 2004. Where benefits of abatement are availed, no CENVAT credit is allowed on inputs & input services.
Shilpi Saxena
(Functional Consultant)
(28 Points)
Replied 15 December 2011
What are the records to be maintained in case , company wants to claim set off against Service Tax.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 15 December 2011
CENVAT Credit can be claimed on the basis of Documents as described in Rule 9 od Cenvat Credit Rules, 2004. Previously maintenance of RG 23 registers was mandatory for claiming CENVAT Credit. RG23 A & RG23 C were records of CENVAT credit availed & utilised. But now maintenance of such records is not mandatory.
Rule 9 (5) & (6) of the above said Rules are produced below:
"(5) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.
(6) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt and consumption of the input services in which the relevant information regarding the value, tax paid, CENVAT credit taken and utilized, the person from whom the input service has been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit."
Hence, when required the manufacturer will have to proof the eligibility of CENVAT credit availed & utilised.
Please check the link below for more details:
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
Survey, Search and Seizure under Income Tax Act 1961
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