BINAYAK (Management Consultant) (104 Points)
10 February 2010hi
A manufacturing company is registered under Goods Transport Agency for the payment of service tax.
Can this company utisize the service tax paid in case of freight inward as input credit since the st liability is borne by the company? the company is paying the service tax for freight inwards and utiilzing the same as input credit, is it allowed?
Abansal
( Manager)
(121 Points)
Replied 10 February 2010
dear binayak,
no a company can not take that input creidt. if the company wants to take input credit it has to proove that without that particulat service, they are unable to provide there output service.
as such no corelation is there between input freight and output freight.
also under the exemption notification of 75%, you can not cliam any input service tax deductiuon , that a prerequisite for granting 75 % rebate
Chintan Vasa
(CA Final Student M.Com)
(1241 Points)
Replied 10 February 2010
Yes. The credit on i/w freight is allowed. Section (2)(l) of Cenvat Credit Rules 2004 defines input service as:
"(l) "input service" means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,
(This clause has been amended vide Notification 10/2008 C.E. (N.T.) - dated 01-03-2008)
and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;"
The last line of the section clearly states that input credit on i/w &o/w freight can be utilised. I hope your query is resolved.
BINAYAK
(Management Consultant)
(104 Points)
Replied 10 February 2010
Mr Chintan
I was asking the input credit for freight inward in case of GTA so can a manufacuring company registered under GTA can avail input credit for the service tax liability???
Abansal
( Manager)
(121 Points)
Replied 11 February 2010
binayak,
there is no corelation between inward service and outward service for a gta manufacturing company , so you can not claim any input credit
even i am working in a manu comp. who is registered under GTA and we have already discussed all such issues from all the tax consultants
BINAYAK
(Management Consultant)
(104 Points)
Replied 11 February 2010
thank you all for your comments and replies
Rajesh Kumar
(Advocate- Tax)
(7806 Points)
Replied 11 February 2010
Service Tax paid on GTA is avilable as cenvat credit. It is available as cenvat credit even if 75% exemption in value is taken. On all inward gta, all GTA paid on sending the material for job work and receving back, all gta paid till place of removal (factory gate in case of factory gate sale, till depot in case of depot sale, till customer doorstep in case of FOR sale) is available. An analysis of the situation is in this article-
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