Hi
While calculating proportionate cenvat to be reversed due to assessee.engaged in providing exempt.as well as taxable.service should it be calculated only on common service.or on total cenvat credit
CA Vishal Mehta (CA) (123 Points)
05 July 2016Hi
While calculating proportionate cenvat to be reversed due to assessee.engaged in providing exempt.as well as taxable.service should it be calculated only on common service.or on total cenvat credit
Rakshit Verma
(Lawyer)
(5 Points)
Replied 08 July 2016
Common service credit however, there are judgments which says total credit should be considered.
Vipul Mittal
(Consultant - Indirect Tax)
(97 Points)
Replied 11 July 2016
Upto 31 March 2016
On perusal of Rule 6(3A) of CCR it appears that the credit has to be reversed on total CENVAT credit availed. Further, the same view was upheld by Hon'ble Tribunal in the case of Thyssenkrupp Industries (I) Pvt Ltd vs Commissioner of Central Excise, Pune, 2014 (10)TMI 476.
However, in my opinion, the intention of the law would not be to reverse credit of input services used specifically against the provision of taxable output services as the same would be unjust to the assessee. Hence, a view may be taken that the credit has to be reversed on common services only but this view may be litigative. (This view is widely followed accross industries)
1 April 2016 onwards
CCR has been amended to take care of this situation. Reversal has to be made in respect of common services only.
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