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Service Tax Credit on Security Service

CA Sahil Singla.. (Service Tax ) (3746 Points)

12 April 2011

Sir

A Manufacturing Excisable firm pays charges for security service on which it deduct TDS as well.

The Security firm charges Service Tax from the concerned firm.

Plz let me know if ST Credit can be taken under Excise Laws ?

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9 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 12 April 2011

No. As Security Services is not incidental to manufacturing process, this service tax cannot be claimed against Exise.

Regards,

Devendra Kulkarni

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 April 2011

security services are not an input service for excisable goods, so input credit is not available.

CA Sahil Singla.. (Service Tax ) (3746 Points)
Replied 13 April 2011

sir plz check out this link...it says credit is avaiable...bcoz security service in indirect to production...find out under INPUT SERVICE Head

/articles/cenvat-credit-under-service-tax-2335.asp

Plz clarify

Durga prasad Ambati (Taxation, Pursuing CA) (737 Points)
Replied 13 April 2011

Dear sahil singla

service tax on security charges is eligible for taken credit as a input service tax.

Security firm charges to manufacturing firm service tax in a capacity of security service provider.

1. U must ensure first , that the secuirty personnel are security provides to Manufacturing company or other premises.

2. If security provides to Manufacturing division, that service tax is eligible for taking cenvat credit

Please go to your Range superintendent and confirm with him. regarding this matter.

Read the following matter. highleted

Manner of distribution of credit by input service distributor

The Input Service Distributor as discussed earlier is not an independent person like dealer in Central Excise who passes on the duty. Input Service Distributor is an office in which name the bills are received though the services are rendered at the factory, branches, depots, or any other premises. As per this provision, the input service distributor may distribute the CENVAT credit in respect of the service tax paid on the input service to its units providing output service, subject to the following conditions:

a. The credit can be distributed by way of document referred in Rule 9 of Rules. ( I.e. by way of invoice, bill, challan)

b. The credit distributed should not exceed the amount of service tax paid thereon; or

c. Credit of service tax attributable to service used in a unit exclusively engaged in providing of exempted services shall not be distributed. Though this is not explicit, harmonious leads to this view.

It is expected that this would be used as a tool for tax planning in multi locational and multi registration service providers.

It is important to note that the Service Tax Registration provisions covers input service distributor within its ambit. They would also have to file the return required under the Rule 9(10).

Documents on which credit is admissible

As per the provisions of Rule 9(1), Credit is allowed on the following documents

Nature of document

Invoice issued by manufacturer from his factory, his depot, premises of the his consignment agent, any other premises from where the goods are sold by or on his behalf under Central Excise Rules 2003. (Including for the goods removed as such under rule 3) 1.

Invoice issued by an importer 2.

Invoices issued by an importer from his depot, premises of his consignment agent if they are registered under rule 9 of Central Excise Rules 2003. 3.

Invoice issued by a first stage dealer or second stage dealer 4.

Bill of entry 5.

Supplementary invoice issued by manufacturer or importer on payment of additional duty unless such short levy etc is with an intention of evasion of payment of duty. It is specifically given that the supplementary invoice includes challan or any other similar document which will evidence such payment of additional duty. 6.

7. Certificate issued by appraiser of customs for postal imports

8. Challan evidencing payment of service tax by specified persons carrying on insurance business for services of agent, receiver of services provided from outside India and received in India in terms of the rules set out, Receiver of GTA services and receiver of sponsorship service.

9. Invoice, Bill or Challan issued by service provider

10. Invoice, Bill or Challan issued by an input service distributor.

The documents listed above should be in terms of the provisions under which it is issued. However if any of the particulars is not there except for details of payment of duty or service tax, descriptttion of goods or taxable service, assessable value, name and address of the factory or warehouse or provider of input service, then the credit on the same would be allowed on satisfaction of the jurisdictional Assistant Commissioner / Deputy Commissioner that the duty or service tax has actually been paid and such input or input services has actually been used in providing output service on recording the reason for allowing such credit.

1 Like

Arun Kumar Singh (GST Advocate) (15188 Points)
Replied 13 April 2011

Manufacturer will be eligible to get cenvat credit of input services. Input service means any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal.

1 Like

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 13 April 2011

a manufacturer has exisable zone as well as zones which are out of excise, example capital goods used in facotry are allowed for cenvat, but capital goods used in office are not allowed, telephone bills service tax of factory are available for input credit,whereas the bills of office are not.

in service tax rules, the whole area is service area, and there is no limit of taxable zone, but any input service is abailable for input credit,

before taking input credit of any such service tax input credit, manufacturer has to get ensure that such service is used exclusive in "excisable production zone" and not used in office or under the zone where duty free goods are produced.

security services are wide concept, and used generallyin common area of mostly in offices, factory production is hardly motivated or initiated with security services, so how the security services would be input service for factory? however if the security services are used for ...........controlling inventory in facotry where the excisable goods are produced, then it may be considered.

1 Like

Anand Gaikwad (MBA) (22 Points)
Replied 05 October 2015

Respected All ,

Requested your guidance on

We are the authorised delare of four wheeer running business for sales / service / spares. On servicing / labour work we are charging Service tax @ 14%. Please guide that we are eligible to take Service Tax Credit on

1) Housekeeping Bill.

2) Security Bill.

3) Employee Mobiles ( On company Name) / Landline Bill ( Fitted in Co. Premises).

4) Software / computer maitenance bill.

5) AMC / Repairs of Plant and Machinery and Other Assets bill.

Requested your guidance and Rule / Notification number . Please guide...

CA Jatin Bakshi (Internal Auditor) (24 Points)
Replied 06 February 2017

Dear Anand,

Following is the point wise reply to your query.

1) House Keeping: If house keeping personnel takes care of the production floor only, then full cenvat credit will be available. If he takes care of office area then no cenvat credit and if he takes care of both of the areas, you can take proportionate input

2) Security Services: Input is available if the security has been provided for taking care of production, machines and labour

3) Employees Mobile: No service tax input since this is not concerned with the production

4) Software/Computer Maintenance: You can avail input of software used specifically for production. and if computers are used in the shop floor, service tax on their maintenance can be availed as input otherwise not.

5) AMC of Plant and Machinery: Service tax can be fully availed. For other assets, you need to specify first, then I can provide my opinion.

Thanks & Regards

CA Jatin Bakshi