Cenvat credit on outward gta for capital goods
This query is : Resolved
12 September 2016
can we take (service tax) cenvat credit on capital goods for outward transportation pl also share us circular
12 September 2016
GTA Credit can not be availed on outward freight
14 September 2016
dear Sir, thanks for above reply,
But there is some confusion, due to mostly company are taking cenvat credit as per reverse mechanisms kindly give us any notification regarding above reply.
But there is some confusion, due to mostly company are taking cenvat credit as per reverse mechanisms kindly give us any notification regarding above reply.
15 September 2016
The Cenvat Credit Rules 2004, define input service. According to Rule 2 (l), input service means any service:
i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal,
and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
a manufacture can take credit on the service tax paid on outward transport of goods up to the place of removal and not beyond that.
The definition given by rule 2(1) is in the context of relief in regard to duty/tax paid on input service. Post-sale transport of manufactured goods is not an input in manufacture. The two clauses in the definition take care to circumscribe input credit by stating that service used in relation to the clearance from the input credit by stating that service used for outward transportation up to the place of removal are to be treated as input service .
The first clause does not mention transport service in particular. The second clause restricts transport service credit up to the place of removal. When these two clauses are read together, it would become clear that transport service credit cannot go beyond transport up to the place of removal. The two clauses, one dealing with general provision and another with a specific item, are not to be read disjunctively as to bring about conflict and to defeat the laws/scheme.
In view of above Cenvat credit cannot be availed beyond place of removal though it has paid under RCM
i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products from the place of removal,
and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;
a manufacture can take credit on the service tax paid on outward transport of goods up to the place of removal and not beyond that.
The definition given by rule 2(1) is in the context of relief in regard to duty/tax paid on input service. Post-sale transport of manufactured goods is not an input in manufacture. The two clauses in the definition take care to circumscribe input credit by stating that service used in relation to the clearance from the input credit by stating that service used for outward transportation up to the place of removal are to be treated as input service .
The first clause does not mention transport service in particular. The second clause restricts transport service credit up to the place of removal. When these two clauses are read together, it would become clear that transport service credit cannot go beyond transport up to the place of removal. The two clauses, one dealing with general provision and another with a specific item, are not to be read disjunctively as to bring about conflict and to defeat the laws/scheme.
In view of above Cenvat credit cannot be availed beyond place of removal though it has paid under RCM
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Scrutiny and reopening of past returns
- Pass word to open justification report for Q1 for FY 2026-27
- PPF interest-As Exempt Income disclosure
- Tax on Deemed Capital Gain
- Section 194JA & JB Income which ITR Form to use
- Booth for sales promotion
- Type of Capital Gain
- Regarding ITR filing with more value than showing in AIS/TIS
- F & O PROFIT REPORTING FOR AY 2026-27
- Exiting partner in partnership firm in gst portal
- Taxability of credit in canara bank ET & T section (NRO)
- Consequences of Non-Deduction of TDS under Income Tax???????????????
- TDS on Rent received on redevelopment of building
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
