service tax on banking & other financial services, Service Tax

[anand rama rao]

Dear Expert,

We have received an invoice on service charges towards banking and other financial services. Shall I take ST credit on this invoice as we are not registered with banking and other financial services in our service tax registration .

Pls confirm as soon as possible

Anand

Posts / Replies

[Pradeep Khatri]

Dear Anand,

For availing CENVAT credit of Input services, there are following pre requirements: -

• Service Provider/Recipient must be registered with Service Tax Department;
• Must be providing taxable services or deemed service provider such as under reverse charge etc.
• There must a nexus either with Manufacturing business or Output Service.
• Services received must be input service as mentioned in the CCR Rules, 2004.

In your matter you are registered with ST Department and receiving taxable service which duly falls under Banking and other Financial Services. There is no requirement that service provider for availing input services must have registration for the same services. It is settled legal position that any service which enhance the quality of output service would be treated as Input Service and Credit would be allowed. Hence, you can avail the CENVAT credit on such services. There is no requirement to have one to one correlation.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)