To make such adjustments (availing input credit of services), the following primary conditions, need to be ensured, in addition to others:
- The service should be an input service, i.e., it should satisfy the definition as per rule 2(l) of the Cenvat Credit rules, 2004 (enclosed below).
- The service should not fall under the exclusion clause of the definition as above.
- The Service tax paid should be evidenced by an invoice containing the details prescribed as per the Rules, i.e.,
- the name, address and the registration number of such person;
- the name and address of the person receiving taxable service;
- descripttion and value of taxable service provided or agreed to be provided; and
- the service tax payable thereon:
- If the service which is provided is an exempted service or where the Service tax is payable under reverse charge as a recipient of service, then such set off is not possible.
- The Service Tax should actually be paid to the provider of the service, i.e., Hotels/Restaurants/businesses.
"input service" means any service,—
(i) used by a provider of output service for providing an output service; or
(ii) used by a 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,
and includes services used in relation to modernisation, 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
but excludes—
(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for—
(a) construction or execution of works contract of a building or a civil structure or a part thereof; or
(b) laying of foundation or making of structures for support of capital goods,
except for the provision of one or more of the specified services; or]
(B) services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or
(BA) service of general insurance business, servicing, repair and maintenance , in so far as they relate to a motor vehicle which is not a capital goods, except when used by—
(a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or
(b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or
(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;
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