SERVICE TAX CREDIT UTILISE FROM CENVAT, Service Tax

[S SHAH]

Dear Sir ,

We are  manufacturing of  crane and also registered under Rule 9 of  Central Excise Rule, 2002 Similarly we are registered under Service Tax Rules vide under Section 69 of the  Finance Act, 1994. As per new service tax Rules effected on 01.07.2012 all services are covered on negative list & other than negative list of services. As on date our regular services are as follows:-

1.Goods Transport by Road(Reverse charge mechanism)
2.Erection, Commissioning & Installation
3.Consulting Engineer
4.Renting of Immovalble property
5.Supply of Tangible Assets for use(i.e. Plant & Machinery)
6.Others means: Payment against Input services(reverse charge & Joint charge mechanism)

In this  case our normal practice & as per my knowledge is that service tax liability paid through GR-7 challan(Cash) & credit on input services are used against clearance of finished goods liability. Now our question is that can Cenvat credit/service tax credit be utilized for payment of service Tax on above mentioned service tax liability. Our Internal auditor is advised to us for above services payment of service tax liability can utilized from service tax credit/Cenvat credit Account.

Kindly give your valuable suggestions for the above subject matter.

With Best Regards,

SNEHAL SHAH

Posts / Replies

[JAMES PG]

Input service credit can be utilised for payment of Excise duty on finished goods or for the payment of Service Tax on provision of Service as is provided in Rule 3(4) of CCR. The only restriction is that such credit cannot be utilised for discharging ST liability under reverse charge mechanism

[Pradeep Khatri]

Under reverse charge mechanism, the service recipient has to pay the service tax through cash transactions.   CENVAT credit will be available as per the provisions of the CENVAT credit Rules.

 

[MANDAVILLI RAMAKRISHNA]

u can set off cenvat credit against service tax liability if and only if you are providing services by

using the capial goods on which cenvat credit is availed.

you can set off service tax input on input services only against the liability on output services, if

the input services are not used for manufacturing but used for providing taxable services only.

rk

[JAMES PG]

Observation of Mr Ramakrishna is not correct. Input service credit can either be utilised for ED payment or for ST payment. There is no one to one correlation required and the only restriction is that credit cannot be used for discharging liability under reverse charge mechanism