Registration to avail cenvat credit

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This query is : Resolved

Praveen Nahata (Querist)

19 October 2013 A Pvt. Ltd. company manufacturing excisable goods. The company is availing & utilising credit of service tax against payment of excise duty. Is it mandatory to register with service tax department to avail credit of service tax even though the company is not providing any service?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)

20 October 2013 Under CENVAT Credit Rules 2004, a manufacturer can avail of CENVAT credit on Input Services that are linked to the manufacture of taxable product or service. Hence there is no necessity for a manufacturer not providing taxable service to be a registered service tax assessee.

That said:

From 2005 the Goods Transport Agency Service liability is on the service recipient i.e. on any transportation of goods by road, the service tax is to be paid either by the consignor or consignee and not the transporter. In such a case registration is required for all manufacturers with Central Excise Authorities as a service recipient under the category Goods Transport Agency.

With effect from 1st July 2012 when the negative list concept came into force the Reverse Charge Mechanism, as it is called, was extended to cover ten other services. Under the reverse charge mechanism the liability to pay service tax is transferred partially or fully to the service recipient. Hence any person who receives any of the services is liable to register itself with Service Tax Authorities and discharge the service tax liability. Among the services covered by Reverse Charge Mechanism the most common services are Security Services, Rent-a-Cab Services,Manpower Supply Services, Directors Services and Legal Consultancy Services.

Any person availing of these services, even if it is onetime, has to seek registration as a service recipient under these categories from the Central Excise Authorities and follow all the obligations laid down by Finance Act 1994.

Praveen Nahata

Praveen Nahata (Querist)

21 October 2013 Thank you.

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