Hi,
one of my client providing taxable service and non-taxable service not maintaing separate books of account. Due to this a ratio (claiming credit) has been work out as per rules and it is 20%
i want to know whether he can claim 100% credit on cash payment of GTA or he should go for 20% as earlier calculated.
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PLEASE REMEMBER ACCOUNTS ARE ALWAYS BASED ON PAPERS AND OR DOCUMENTS
WHATEVER YOU DO IT MUST BE SUPPORTED BY DOCUMENTS
PLEASE GO THROUGH THE LINK: https://finmin.nic.in/law/CENVATcreditrules2004.pdf ABLUT CENVAT CREDIT AND TAKE ANY DECESION
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As the case suggests, You are working in Rule 6(3)(ii). Section has prescribed the method of calculation of cenvat credit to be availed. and Explaination 2 to this section provides that you can not avail credit of those services and goods which are used exclusively for exempted services.
Now if u have used the service in relation to the service which is exempted u can not avail credit of the amount paid by u. and if u have used the service in relation to the service which is taxable or in relation to both the service, you can avail cenvat credit only to the extent of the amount derived by respective percentage. It doesn't makes a difference whether u paid the amount of service tax in cash on input service.
Regards
Rajesh Ahuja
CAclubindia
