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Input service distributor (Excise)

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This query is : Resolved


( Author )
23 January 2010

explain input service distributor in simple language


Reetika Goel

( Expert )
23 January 2010

Input Service Distributor:
When companies have distributed network of manufacturing or service provision, but have centrallized billing. They receive bills for some common services or some common inputs at their centrallized billing address name.
In such a case, the centrallized billing office, distributes the input cenvat (ST or Input CENVAT) to various manufacturing units or service provision offices on the basis of taxable output produced or services provided.

The centrallized billing office is then, termed as Input Service Distributor.

The Manufacturer can only distribute input ST, whereas an output service distribuor can distribute Input ST and Input CENVAT both. But, common in both is they can't distribute Capital Good CENVAT...



SANJAY JAIN

( Expert )
25 January 2010

SANJAY JAIN
CONSULTANT
Central Excise, Service Tax, Customs, Exim Policy
House No. 2489 Sector 8
Faridabad (Haryana)
Mobile - 9312982265
E-mail- sanjayinfbd@yahoo.com
________________________________________________________________________________________________

MEANING OF INPUT SERVICE DISTRIBUTOR

As per definition given in the Rule 2(m) of the CENVAT Credit Rule 2004, Input Service Distributor means the office of the manufacturer/producer or of output service provider who receives the invoices for purchase of services from the output service provider under Rule 4A of the Service Tax Rules 1994.

MANNER OF DISTRIBUTION

As per Rule 7 of the CENVAT Credit Rules 2004, the input service distributor can not distribute CENVAT Credit of Service Tax in excess of the amount paid, to its unit engaged in manufacturing/providing output service and secondly the credit of Service tax can not be distributed attributable to the unit exclusively engaged to manufacturing exempted goods or providing exempted output services.

ISSUE OF THE INVOICE

The Rule 4A(2) of the Service Tax Rules 1994 stipulates that issuing invoices by the input service distributor for distributing the CENVAT Credit of Service tax paid. The invoice shall be serial numbered containing the following minimum detail.
i) Name, address and Invoice Number of the output service provider from whom input service purchased and against which the credit is being distributed.
ii) Name and address of the input service distributor.
iii) Name and address of the recipient unit.
iv) The amount of credit distributed.

The invoice issued in the above manner is the authentic document for availing CENVAT Credit by the manufacturer as defined in the Rule 9(g) of the CENVAT Credit Rules 2004 but at the time of taking credit, the manufacturer must ensure that no credit shall be allowed on the part of the input service that is used in relation to the exempted goods [Rule 6(1)].

REGISTRATION

The Section 69 of the Finance Act, 1994 has been amended vide Finance Act, 2005 for empowering the Central Government to specify the class of person to be registered and in persuasion to this provision, the Central Government vide Notification No. 27/2005-ST dated 07.06.2005 has set out SERVICE TAX (REGISTRATION OF SPECIAL CATEGORY OF PERSONS) Rules, 2005 wherein the Input Service distributor and Output Service Provider whose aggregate value taxable service exceeds 3lakh in the financial year, were specified.

RETURN

The Rule 9(10) of the CENVAT Credit Rules 2004 requires the input service distributor to file the half yearly return in the statement giving the detail of the credit received and distributed during the said half yearly period by the end of the following months. This return, as per rule, is to be filed to the Superintendent Central Excise but in practical this means the Superintendent, Service Tax.


RAMESH KUMAR VERMA

( Expert )
25 January 2010

DEAR SIR,

WHEN ANY COMPANIES HAVE DISTRIBUTED NETWORK OF MANUFACTURING OR SERVICE PROVISION, BUT HAVE CENTRALLIZED BILLING. THEY ALSO RECEIVE BILLS FOR SOME COMMON SERVICES OR SOME COMMON INPUTS AT THEIR CENTRALLIZED BILLING ADDRESS NAME.
IN SUCH A CASE, THE CENTRALLIZED BILLING OFFICE DISTRIBUTES THE INPUT CENVAT (ST OR INPUT CENVAT) TO VARIOUS MANUFACTURING UNITS OR SERVICE PROVISION OFFICES ON THE BASIS OF TAXABLE OUTPUT PRODUCED OR SERVICES PROVIDED.

AND CENVAT CREDIT RULES ALSO AVAIL RAMESH KUMAR VERMA


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