Venkateswara Rao (Sr.Accountant) (42 Points)
09 December 2013Hi..
I am accountatnt in Two Wheeler Auto mobile Dealer (Authorised Dear). My Doubt is that Can I Utlise 100% of service tax input on payment of output of service tax. I got information about 100% Input of service tax can't be utlised on output of serivce tax. If it so, Please provide me Notification number.
Jeetendra Goyal
(Student CA Final )
(175 Points)
Replied 09 December 2013
first provide nature of input service availed............ then tell u abt ur query
Venkateswara Rao
(Sr.Accountant)
(42 Points)
Replied 11 December 2013
Thank you sir.... here mentioned below my service tax input deatlis
Service tax input on Rent, Telephone Charges, Security charges and Courier charges.
I would like make few words to you about my orgnisation in detail for more clarification. Actually we have show room as usally whare vehicles are being sold and another one workshop where vehicles service, Repair & Recondition and Pre-Delivery charges are being done. So We have to pay service tax on Vehicles Service Charges, Repair & Recondition charges and Pre Deliviery inspection charges.
My doubt is that can i utlise 100% service tax input on output service tax. But i heard that 100% input serivce tax can't utlised on output service tax. please provide me notification if there is, regarding this.
Thanking you sir
Neljo Davis ACA
(Consultant)
(630 Points)
Replied 11 December 2013
In this case the authorised dealer is doing Taxable Output Service and Exempted Service (Trading of Goods). Where provider of output service avails of CENVAT credit in respect of any inputs or input services and provides such output service which are chargeable to tax as well as exempted services, then provider of output service shall maintain separate accounts or pay an amount equal to six per cent of value of the exempted services or pay an amount as determined under sub-rule (3A) of rule 6 of Cenvat Credit Rules,2004 - Please refer rule 6 of CENVAT CREDIT RULES, 2004
m.vasudeva murty
(proprietor)
(21 Points)
Replied 12 December 2013
My client is a auto mobile service guarage. The guarage was taken on lease @ Rs 1,00,000 per month. The owner of the guarage raises a taxable invoice on my client adding 12.36% on Rs. Lakh towards service tax and my client / tenant pays Rs. 1,12,360/- every month.
My question no-1:
Whether my client is entitled for an input credit of service tax Rs 12,360 every month ? If yes whether this input credit is allowed to set off against his out service tax liability ?
My client established his guarage in the year 2001 and continuing in the same premises till today. The owner of the guarage raises an taxable invoice during December 2013 for service tax on the amounts of rents paid for period 1/7/2007 to 31/3/2012 which it was not charged earlier during that period. the amount works out to above 4 lakhs and calls for the payment on or before 31/12/2013.
My 2nd question is
if the amount is paid whether input credit is allowed ? if yes whether this credit can be set off against my client's out put tax liabilty for the month december and subsequent months?
Please advise me earliest possible
murty mv
Neljo Davis ACA
(Consultant)
(630 Points)
Replied 12 December 2013
For Question No.1 - The Client is entitled for an input credit of service tax for Rs 12,360 every month. The input credit can be used to set off against out service tax liability.
Neljo Davis ACA
(Consultant)
(630 Points)
Replied 13 December 2013
Please see the clarification by board in Circular No. 170/5/2013-ST dated 8 August 2013 Sl.No-18 on availability of cenvat credit on Service Tax Paid on VCES Scheme.
Question- Whether the tax dues amount paid under VCES would be eligible as CENVAT credit to the recipient of service under a supplementary invoice?
Answer - Rule 6(2) of the Service Tax Voluntary Compliance Encouragement Rules, 2013, prescribes that CENVAT credit cannot be utilized for payment of “tax dues” under the Scheme. Except this condition, all issues relating to admissibility of CENVAT credit are to be determined in terms of the provisions of the Cenvat Credit Rules. As regards admissibility of CENVAT credit in situations covered above question attention is invited to rule 9(1)(bb) respectively of the Cenvat Credit Rules, 2004.
Board has not clearly answered about the admissibility of CENVAT credit for service tax paid under VCES scheme.
Please see the following link for more details. https://www.vcesindia.com/commentary_vces_004.php
Neljo Davis ACA
(Consultant)
(630 Points)
Replied 17 December 2013
Example for Rule 6 of CENVAT Credit Rules, 2004
X Ltd has 2 Divisions-
Rule 6 of CENVAT Credit Rules, 2004 is applicable to X Ltd. Rule 6 determines the amount of CENVAT credit can be availed or amount of CENVAT need to be reversed.
X Ltd uses three input services.
|
S.No |
Nature |
Used By |
Value of Service |
Service Tax |
|
1 |
Marketing Service |
Division A |
2,00,000 |
24,720 |
|
2 |
Garage Rent |
Division B |
1,00,000 |
12,360 |
|
3 |
Auditing Service |
Division A & B |
50,000 |
6,180 |
Additional information needed for determination of CENVAT credit
Total Turnover of X Ltd - 600,000
Turnover of Division A during the period - 5,00,000
Cost of goods sold (Division A) - 3,75,000
Turnover of Division B during the period - 1,00,000
X Ltd has three options to determine the CENVAT credit that can be utilized
Option I – Maintain Separate books of accounts of Division A and Division B
Available CENVAT credit for the input services will be – 12,360+1,030* =13,390
*Proportionate based on turnover i.e. 6180*100,000/600,000
Option II – Pay and amount equal to 6% of value of exempted service
Value of exempted service in case of trading, shall be the difference between the sale price and the cost of goods sold or ten per cent of the cost of goods sold, whichever is more.
Value of exempted service will be 1,25,000 (5,00,000 -3,75,000) or 37,500(3,75,000*10%) whichever is more. i.e. 1,25,000
Available CENVAT credit for the input services will be:- 12,360+6,180-7725*=10,815
*6% of value of exempted service i.e. 125000*6.18% (Education Cess Extra)
Option III – Pay the amount attributable to input services used for the provision of exempted services = (M/N) multiplied by P, where
M denotes total value of exempted services provided during the period,
N denotes total value of taxable and exempted services provided during the period, and
P denotes total CENVAT credit taken on input services during the period;
i.e. 1,25,000*(12360+6180) = 10,300
(1,25,000+1,00,000)
Available CENVAT credit for the input services will be:- 12,360+6,180-10300=8,240
Note: The credit of marketing service cannot be allowed in all the three options since the input service is used exclusively for provision of exempted services.
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