Service tax credit in excise
This query is : Resolved
14 July 2014
We have a factory located in silvassa (UT) for produced steel articles on which excise is leviable. The HO is located in mumbai. We receive bills for various services on which service tax is levied. We don't have any service tax liability. How to take service tax CENVAT credit against the excise payable. Please explain in details about which forms to fill necessary documents etc
15 July 2014
If that services are used in the manufacturing activity then you can take the cenvat credit of input service.
16 August 2014
What about service used for administration office? Like service tax on telephone expenses, professional fees etc. What documents are required to be produced?
16 August 2014
We have a registration of Head office for input service distributor. But we have not filed any service tax return for the said period. Can we still transfer the credit to factory by issue of challan as stated in Rule 9 of CCR? If we have to file service tax return now, can we take unclaimed CENVAT credit from 01/04/10 to 31/03/2014 in one single return in Form ST-3? Kindly Help
24 July 2025
Your query relates to **utilizing service tax credit (CENVAT credit) at your factory (excise unit)**, based on **input services received at the Head Office (HO)**, specifically for the period **2010–2014**. Here's a detailed breakdown of how it works under the **CENVAT Credit Rules, 2004** (as they existed before GST):
---
## ✅ 1. **Eligibility for Taking CENVAT Credit**
You can take **service tax credit** against **excise duty payable**, **even if your factory has no service tax liability**, provided:
### a) The services are used **directly or indirectly** in or in relation to **manufacturing activity**
E.g.: Technical consultancy, engineering design, security services, input procurement advice, logistics, etc.
### b) The services used by the **Head Office (HO)** must be **distributed to the factory** through **Input Service Distributor (ISD)** mechanism.
---
## ✅ 2. **Use of Input Service Distributor (ISD)**
Since you **already have ISD registration** at your **HO in Mumbai**, you're on the right track. As per **Rule 7 & Rule 9 of the CCR, 2004**, an ISD can distribute credit of **input services used at HO** (like admin, finance, HR, IT, legal, etc.) to **manufacturing units** where output duty is paid.
---
### 📋 What the ISD needs to do:
1. **Distribute credit through an internal challan** to the factory (Silvassa).
2. Maintain records of:
* Service provider invoices at HO
* Credit distributed challans
* Details of how credits relate to the manufacturing unit
3. **File ST-3 returns** under the ISD registration to report this distribution.
---
## 📝 Forms & Documentation
| **Form / Document** | **Purpose** |
| ----------------------------- | ------------------------------------------------------------ |
| **ST-3 (ISD)** | To report service tax credit received and distributed |
| **ISD Challan (Rule 9 CCR)** | Internal challan to transfer credit from HO to factory |
| **Service Provider Invoices** | Must mention HO as recipient and include service tax details |
| **ISD Register** | Maintain register of credits received and distributed |
---
## 🕒 3. **Claiming Credit for Past Years (2010–2014)**
Yes, you can **claim unutilized CENVAT credit** for **past years** **(April 1, 2010 to March 31, 2014)** **in the next ST-3 return** filed, provided:
* You **have documentary evidence** (invoices) of the services used.
* The credit is **not time-barred** (at that time, there was **no specific time limit**; later, a 1-year limit was added via amendments—but it wasn't yet applicable fully during that period).
* The services were **used in or in relation to manufacture** or eligible business activities.
* You were **eligible to take credit but had not claimed it earlier**.
📌 Note: As of **Finance Act, 2015**, the time limit for availing CENVAT credit was amended to **1 year from the date of invoice**, but this was **not applicable to invoices before March 1, 2015**.
---
## 📦 Example: Telephone/Professional Fees at HO
* These services are **admin-related**, but still **relate to manufacturing business**.
* Since HO has ISD registration, credit for such services can be transferred to the factory.
* Even if no service tax return was filed earlier, **you can file late ST-3 now** and distribute accumulated credit via challan.
---
## ✅ Steps to Take Now
1. **Collect all eligible invoices (2010–2014)** where service tax is paid.
2. **Prepare ISD challans** to distribute credit to the Silvassa factory.
3. **File pending ST-3 returns** for the ISD registration—mention:
* Credit received at HO
* Credit distributed to factory
4. **Factory will take credit** of service tax via **CENVAT register** and offset against **excise duty payable**.
---
## 🚫 Important: No Double Credit or Expired Claims
* Ensure no credit has already been taken.
* Ensure invoices relate to eligible input services (not personal or non-business).
* If any credits were denied in audit/objections earlier, don’t reclaim them unless resolved.
---
### 🔚 Conclusion:
* ✅ You **can claim service tax credit** received at HO and **use it against excise duty** at factory.
* 📝 File **ST-3 returns** under **ISD registration**, even for past years.
* 🧾 Issue **ISD challans** as per Rule 9 of CCR, 2004.
* 📥 Maintain proper documentation and justification for all credits availed and transferred.
---
Would you like a sample ISD challan format or a checklist for filing ST-3?
---
## ✅ 1. **Eligibility for Taking CENVAT Credit**
You can take **service tax credit** against **excise duty payable**, **even if your factory has no service tax liability**, provided:
### a) The services are used **directly or indirectly** in or in relation to **manufacturing activity**
E.g.: Technical consultancy, engineering design, security services, input procurement advice, logistics, etc.
### b) The services used by the **Head Office (HO)** must be **distributed to the factory** through **Input Service Distributor (ISD)** mechanism.
---
## ✅ 2. **Use of Input Service Distributor (ISD)**
Since you **already have ISD registration** at your **HO in Mumbai**, you're on the right track. As per **Rule 7 & Rule 9 of the CCR, 2004**, an ISD can distribute credit of **input services used at HO** (like admin, finance, HR, IT, legal, etc.) to **manufacturing units** where output duty is paid.
---
### 📋 What the ISD needs to do:
1. **Distribute credit through an internal challan** to the factory (Silvassa).
2. Maintain records of:
* Service provider invoices at HO
* Credit distributed challans
* Details of how credits relate to the manufacturing unit
3. **File ST-3 returns** under the ISD registration to report this distribution.
---
## 📝 Forms & Documentation
| **Form / Document** | **Purpose** |
| ----------------------------- | ------------------------------------------------------------ |
| **ST-3 (ISD)** | To report service tax credit received and distributed |
| **ISD Challan (Rule 9 CCR)** | Internal challan to transfer credit from HO to factory |
| **Service Provider Invoices** | Must mention HO as recipient and include service tax details |
| **ISD Register** | Maintain register of credits received and distributed |
---
## 🕒 3. **Claiming Credit for Past Years (2010–2014)**
Yes, you can **claim unutilized CENVAT credit** for **past years** **(April 1, 2010 to March 31, 2014)** **in the next ST-3 return** filed, provided:
* You **have documentary evidence** (invoices) of the services used.
* The credit is **not time-barred** (at that time, there was **no specific time limit**; later, a 1-year limit was added via amendments—but it wasn't yet applicable fully during that period).
* The services were **used in or in relation to manufacture** or eligible business activities.
* You were **eligible to take credit but had not claimed it earlier**.
📌 Note: As of **Finance Act, 2015**, the time limit for availing CENVAT credit was amended to **1 year from the date of invoice**, but this was **not applicable to invoices before March 1, 2015**.
---
## 📦 Example: Telephone/Professional Fees at HO
* These services are **admin-related**, but still **relate to manufacturing business**.
* Since HO has ISD registration, credit for such services can be transferred to the factory.
* Even if no service tax return was filed earlier, **you can file late ST-3 now** and distribute accumulated credit via challan.
---
## ✅ Steps to Take Now
1. **Collect all eligible invoices (2010–2014)** where service tax is paid.
2. **Prepare ISD challans** to distribute credit to the Silvassa factory.
3. **File pending ST-3 returns** for the ISD registration—mention:
* Credit received at HO
* Credit distributed to factory
4. **Factory will take credit** of service tax via **CENVAT register** and offset against **excise duty payable**.
---
## 🚫 Important: No Double Credit or Expired Claims
* Ensure no credit has already been taken.
* Ensure invoices relate to eligible input services (not personal or non-business).
* If any credits were denied in audit/objections earlier, don’t reclaim them unless resolved.
---
### 🔚 Conclusion:
* ✅ You **can claim service tax credit** received at HO and **use it against excise duty** at factory.
* 📝 File **ST-3 returns** under **ISD registration**, even for past years.
* 🧾 Issue **ISD challans** as per Rule 9 of CCR, 2004.
* 📥 Maintain proper documentation and justification for all credits availed and transferred.
---
Would you like a sample ISD challan format or a checklist for filing ST-3?
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