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TMI BlogCENVAT credit eligibility on KKC as a manufacturer (deemed Service provider i.e. Reverse change MachanismX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear experts, We are manufacturer and also liable to pay service tax under reverse charge mechanism on GTA, Works contract, Legal services etc. and also providing one service (receiving Intending commission from outside India) i.e. Business Auxiliary service. Now after 1 st June 2016 Krishi Kalyan Cess will be applicable to all services. Below is the Para 3.1 of F. No. 334/8/2016-TRU dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.02.2016 Enabling provision for levy of Krishi Kalyan Cess : 3.1 Krishi Kalyan Cess (KKC) is proposed to be levied with effect from 1st June, 2016 on any or all the taxable services at the rate of 0.5% on the value of such taxable services. Credit of Krishi Kalyan Cess paid on input services shall be allowed to be used for payment of the proposed Cess on the service provided by a service p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovider. In above clarification letter TRU is clarify that CENVAT credit will be available to the service provider. My query is: Since we are paying service tax on reverse charge basis (deemed Service provider) and also in Business auxiliary service (as a service provider) can CENVAT credit is available to us? (received on various input services used in relation to manufacturing activity) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Reply By Rajagopalan Ranganathan - The Reply = Sir, You can avail the credit of Krishi Kalyan Cess paid by you under RCM and can utilise the same for payment of Krishi Kalyan Cess only on output service provided by you. - Reply By KASTURI SETHI - The Reply = I concur with the views of Sh. Rajagopalan Ranganathan, Sir - Reply By Mahir S - The Reply = Credit of Krishi Kalyan Cess paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input services shall be allowed to be used for payment of the proposed Cess on the service provided by a service provider. - Reply By Yatin Bhopi - The Reply = Thanks a lot Sir, Can we used this credit also to pay Krishi Kalyan cess liable to pay under reverse change? - Reply By surya narayana - The Reply = Dear Friend, The answer to your first point is that whether you can avail the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit ST paid under reverse charge Mechanism is YES except, for the services that are under exclusion clause in the definition and the same can be used for payment of your service Tax liability. Second question related to KKC, as already stated , you can avail the cenvat credit and this particular amount taken as credit to be utilized only for payment of KKC and not for any other purpose. Hope you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r query is clarified. Best Regards Suryanarayana - Reply By Rajagopalan Ranganathan - The Reply = Sir, In my view cenvat credit cannot be used for payment of service tax under reverse charge mechanism. The same is ture in respect of Krishi kalyan CEss also. - Reply By KASTURI SETHI - The Reply = Agreed with Sh. Rajagopalan Ranganathan, Sir. As per Rule 3(4) Explanation inserted vide Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification No.28/12-CE(NT) dated 20.6.12 (effective from 1.7.2012) , Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service recipient . Hence cenvat credit cannot be used to pay tax by service receiver. Service tax has to be paid by cash only through i.e. GAR-7 challan. Once paid, Cenvat credit c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be taken, if otherwise, it is his eligible input service . It is applicable to new cess also. - Reply By Yatin Bhopi - The Reply = Thanks a lot Sir - Reply By surya narayana - The Reply = Dear sirs Agreed with the point. I have given my view considering that the company also registered as ISD and once ISD distributes the credit the manufacturing unit can use for payment of ST or duty and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise there is no purpose in allowing credit of such amount paid under reverse charge. Further, this restriction is meant for ISD considering that he can only distribute such amount and cannot use for payment of ST Hope the point is clear Regards surya - Reply By Ganeshan Kalyani - The Reply = I agree with the experts opinion above, CENVAT Credit on KKC is not eligible to manufacturer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it has been clarified that such is only eligible to service provider and that to only to set it off against KKC. Thanks. - CENVAT credit eligibility on KKC as a manufacturer (deemed Service provider i.e. Reverse change Machanism - Query Started By: - Yatin Bhopi Dated:- 11-3-2016 Service Tax - Got 10 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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