Cenvat Credit

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CA Suresh Choudhary (Querist)
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11 August 2009 If the CST & VAT is paid for the material used for the production/generation of taxable service then can we claim the CENVAT credit of CST & VAT paid towards Service tax payable.

Thanks in advance.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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11 August 2009 Credit of taxes specified in Rule 3 of Cenvat Credit Rules, 2004 are eligible. CST & VAT, are not specified in the said rule, hence in eligible for Cenvat Credit.

There is difference between material sold during provision of service and material used in provision of service. In the former case, Notification No. 12/2003 - ST dated 20/06/2003, as ammended, will be applicable, so as to exclude the value of material form the taxable value. CST & VAT being integral part cost of material will also be eligible for deduction.

SARATHY RP

SARATHY RP (Expert)
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12 August 2009 Dear Mr suresh Choudhry,

CST & VAT are indirect tax on sale of goods whereas Service tax is a value added tax on taxable services. While CST cannot be utilised as set-off, VAT & Ser Tax can be utilised only against respective output tax liabilities. If there is excess of input tax / CENVAT, they can either be carried forward or refund can be claimed only with reference to respective Acts.

Thanks.
Sarathy

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