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Service Tax on Rent for Commercial Property-Refund or Cenvat

bala (CA) (18 Points)

04 February 2008

A co. X Ltd ,an EOU ,has paid Service Tax on Rent paid for Commercial Property from where business is being carried out. As per Foreign Trade Policy 07-08 EOU is entitled to Cenvat Credit of Service Tax paid. X Ltd is not providing any taxable output service ,Would like to know what is the procedure for claiming Cenvat Credit of Service Tax paid on Rent or is the Co .entitled for refund of the Service Tax paid.If Yes, What is the procedure for claiming Refund??

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4 Replies

Nagaraju Pogula (Partner) (175 Points)
Replied 04 February 2008

NO INPUT CREDIT IF FINAL PRODUCT/OUTPUT SERVICE EXEMPT FROM DUTY/ SERVICE TAX - No credit is available if final product is exempt from duty or final service is exempt from service tax. If a manufacturer manufactures more than one product, it may happen that some of the products are exempt from duty. Similarly, in case of service provider, some services may be taxable while some services may not be covered. In such cases, duty paid on inputs and service tax paid on input services used for manufacture of exempted products/services cannot be used for payment of duty or tax on other final products/services which are not exempt from duty/tax. If the manufacturer/service provider uses common inputs both for exempted as well as un-exempted goods/services, he should maintain separate records for inputs/input services used for manufacture of exempted final products and should not avail Cenvat on such inputs/input services. However, if he does not maintain separate records and inventories of inputs/input services used in exempted final products/services, he has to pay an ‘amount’ of 10% of price of exempted goods. - - As per section 91 read with section 93 of Finance (No. 2) Act, 2004, education cess is payable only on ‘duties of excise’. ‘Amount’ is not ‘duty’. Hence, education cess is not payable on such ‘amount’.

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(Guest)

Pls advise whether service tax credit (during the period when application is not forwarded to Dept.) is available if service tax registration application is filed after due date?

Guddu (35 Points)
Replied 05 February 2008

As per 'Input Service' definition, ANY Services USED in related to providing TAXABLE OUTPUT SERVICES, irrespective of that you are registered or not for the time being, when application was within/or not forwarded Service Tax Department (except u have opted to be SSI for a F/Y). As per my Opinion considering the above provision, service tax credit is available in your case.(Delay-compliance of your Registration application would not effact the Input because Output services are being levied during that period). Rajiv Kr. Singh Chartered Accountant 9818006405

(Guest)

1) If we have availed services from Non Residents and we have paid service tax (as if we have rendered the service) then can we avail cenvat credit on it? 2) We have an IT Park registered in STTP Zone and we are lettng out offices to customers and on rent we are charging sevice tax. My quetion is whether service tax paid by us can be refunded? and shall we eligible for input credit for construction of IR Park?