Cenvat credit
This query is : Resolved
20 November 2013
Friends help me out of a confusion in service tax,
Suppose a company providing multiple services, whether the excess credit available in one service can be adjusted with the output tax payable for some other kind of services which are not related to each other can you explain with an example
Suppose a company providing multiple services, whether the excess credit available in one service can be adjusted with the output tax payable for some other kind of services which are not related to each other can you explain with an example
Suresh Ramaswamy
(Expert)
25 November 2013
The CESTAT Bombay in the case of Jyoti Structurals Limited vs. Commissioner of Central Excise Nashik has held in October 2012 that there is no requirement under CENVAT Credit Rules 2004 for a one-to-one relation to avail and utilize the Input Credit.
In simple terms if there is an eligible input (input to be used for manufacturing taxable product or rendering taxable output service) and a taxable output liability, the credit can be used to pay off the tax liability, even though the same was not used for that specific product or service.
Hence where a company provides various services and has input credit from any one of them, it can utilize the credit to pay off the output tax of any of the services.
Till today the Department has not filed an appeal against this order, and the field formations are accepting the same as satisfactory reply when there is no one-to-one relation between the input credit and output service/ product.
In simple terms if there is an eligible input (input to be used for manufacturing taxable product or rendering taxable output service) and a taxable output liability, the credit can be used to pay off the tax liability, even though the same was not used for that specific product or service.
Hence where a company provides various services and has input credit from any one of them, it can utilize the credit to pay off the output tax of any of the services.
Till today the Department has not filed an appeal against this order, and the field formations are accepting the same as satisfactory reply when there is no one-to-one relation between the input credit and output service/ product.
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