Vat registration ...? & cenvat input
Querist : Anonymous
One of new company " X " buying machinery/ or etc., from " Y ". in this case Y is having VAT registration, excise registration. However, X business in future is only service providing and no sales. In this case for " X " can avoid VAT registration and no input will be taken by " X " and tax liability will be cleared by " Y ".
Moreover, cenvat credit can avail by " X " please clarify.
With Regards,
Narasimhan
Querist : Anonymous
Here’s a clear explanation regarding your query about VAT registration, VAT input credit, and CENVAT credit:
Scenario:
Company X buys machinery from Company Y.
Company Y has VAT and Excise registration.
Company X will be providing only services in the future, no sale of goods.
1. VAT Registration for Company X
Since Company X is only providing services and not selling taxable goods, VAT registration is generally not required for X.
VAT is a tax on sale of goods, so if X is purely a service provider (and services are not under VAT but under Service Tax or GST), no VAT registration is needed.
X will not claim input VAT credit because it is not registered under VAT.
2. VAT on Purchases
Company Y (the seller) will charge VAT on machinery sale to X.
X pays VAT as a customer, but cannot claim input VAT credit if not registered.
Tax liability for VAT remains with Y on its sales.
3. CENVAT Credit for Company X
If machinery is liable to Excise Duty and Company X is registered under Excise or GST (Input Tax Credit framework), then X can claim CENVAT (or GST ITC) credit on inputs like machinery used in providing services (if eligible).
CENVAT credit is separate from VAT and pertains to excise/service tax/GST credit.
So, even if X is not VAT registered, it may be eligible to claim CENVAT/GST credit if it has excise/service tax/GST registration and the machinery is used for taxable activities.
Summary Table:
Aspect Company X’s Position
VAT Registration Not required if only services provided
Input VAT Credit Cannot claim (no VAT registration)
VAT Liability on purchase Paid by X, charged by Y
CENVAT Credit Can be claimed if excise/GST registered and eligible
Click here to login now
Similar Resolved Queries
- Depreciation Chart Companies Act
- GST Audit whether Govt Companies are exempt?
- PTRC Show Cause Notice on Email
- Capital Gail Exemption Certificate
- Utilisation Fy 25-26 TDS challans in Fy 26-27 TDS Return
- Transfer of Physical Stock Between Two Proprietorship Concerns
- Unable to File TDS Q2 Return – New TRACES Portal Error
- Oct 2025 Invoices
- MSME disclosure and disallowance
- SECTION 393(3) TAX ON CASH WITHDRAWAL
- Expert Help Required for TDS Refund 100000 Through TRACES – AY 2022–23
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
