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Service tax

A.Ramakrishna (Manager-Accounts) (30 Points)

31 December 2009

Dear CA Club Member,

I am a proprietor of a group of companies both rendering and receiving services of different nature. If I obtain centrallised service tax registration and resort to centralised billing for different units, can I avail input service tax credits irrespective of different nature of services ?(To be precise, I have both Engineering and Tyre Retreading services )

Ramakrishna.

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4 Replies

CA CS Akashdeep Singh (Practicing CA) (1394 Points)
Replied 31 December 2009

As i understand from your question is that you are proprietor and provide more than one service.

You can utilized the CENVAT credit of input service used in providing output service, for the payment of service tax on any output service. [Rule 3(4) of Cenvat Credit Rules, 2004]

IF you are providing 2 services let X & Y, You can't utilize the CENVAT credit of input use in any service (X & Y) for the payment of service tax on any output service [Rule 3(4) of Cenvat Credit Rules, 2004]

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Amir (Learner) (4016 Points)
Replied 31 December 2009

Mr.Ramakrishna,

Firstly Cenvat Credit on Input service does not depends upon the kind of registration (i:e whether Centralized or Decentralized)

Secondly, IF INPUT SERVICE (OF WHICH U WANT TO TAKE CENVAT CREDIT) IS UTILIZED FOR THE PURPOSE OF PROVIDING SERVICES WHICH IS TAXABLE UNDER SERVICE TAX THEN NO ONE TO ONE CORRELATION IS REQUIRED AND CREDIT IS ALLOWED..

EXAMPLE :- Mr. A is providing 2 services "X" and "Y" (BOTH ARE TAXABLE SERVICES UNDER SERVICE TAX)

AND HE HAS UTILIZED INPUT SERVICE "C" FOR PROVIDING SERVICE "X"

SIMILARLY INPUT SERVICE "D" FOR PROVIDING SERVICE "Y"

NOW CENVAT CREDIT ON INPUT SERVICE "D" CAN BE UTILIZED AGAINST THE SERVICE TAX PAYMENT ON SERVICE "X" AS WELL AS SERVICE "Y"

SIMILARLY CENVAT CREDIT ON INPUT SERVICE "C" CAN BE UTILIZED AGAINST THE SERVICE TAX PAYMENT ON SERVICE "Y" AS WELL AS SERVICE "X"

THIS IS WHAT IS CALLED AS NO ONE TO ONE CORRELATION IS REQUIRED

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 01 January 2010

Yes you can avail the service tax credits of one for the other as there is no one to one correlation necessary. Having a centralised registration makes sense in enabling the credit.