Cenvat credit on service tax paid under reverse charge

Dear Rahul,

1) is comes under "Rent a cab" service - Cenvat Credit not allowed

2) Work Contract Services - related to civil construction/repair - Cenvat credit not allowable.

    work contract services - related AMC will allowable to take Cenvat Credit.

3) Legal Services - Eligible to take Cenvat Credit.

Thanks sir, I also want to confirm regarding input credit of service tax paid by a mfp under reverse charge on the following services

1. Manpower services

2. Business support service

3. Outdoor catering services

Dear Rahul,

As a general rule RCM does not hamper the Cenvat credit. If the cenvat credit of a particular service category is allowable then you can claim the same in RCM as well. The difference in RCM is only that first you have pay it in cash and then claim cenvat for discharge of other ST liability. RCM cannot be discharged against cenvat.

Regards,

Mohit

Dear Sir,

We are reciving works contract service, can we avail credit for both service tax paid to service provider and paid to department(in subsequent month) on reverse charge. and

a) Work related to new constrution of building is not eligable to avail credit, but can we avail service tax paid to service provider (50%) ?

Please clear my doubts. Thanks in advance.

Dear Manjunath,

pl refer CCR2004 rule 2(1);

the rule clearly says that certain services are excludes to take Cenvat Credit,-

(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods,  except for the provision of one or more of the specified services; or

(B) Services provided by way of renting of a motor vehicle, in so far as they relate to a motor vehicle which is not a capital goods; or

in your case you are saying that your work related to new construction CC is not available, the question of providers portion 50% does not arise here. because service portion is not cretaria.

service is not eligible means both SP & SR portion is not eligible to take Cenvat Credit.

Can CENVAT Credit be adjusted to pay Service Tax on Legal Service by the recipient under reverse charge

Dear Saurabh,

No, when service defines under Reverse Charge Mechanism, Cenvat Credit cannot be adjusted to pay Service Tax on RCM services.

It sholud be paid through CASH only.

Dear Rahul,

You can take input service credit of Works contract as the same is for AMC and Renovation and not Original works.

Tranport of passenger - If it is Rent - a - cab not allowed whereas if it is GTA it is allowed (Inward transportaion)

Legal services - allowed

Relevat Extract of provision "Provided that in case of an input service where the service tax is paid on reverse charge by the recipient of the service, the CENVAT credit in respect of such input service shall be allowed on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in rule 9:

Refer Rule 3(7) of Cenvat Credit Rules 2004.

Dear Venkat,

In recent EA2000 team denied Renovation works of works contract cenvat credit.

you are requested to give full clarity on the above, then we will protest.

Dear Sathya sir,

Extrat of "Input Service" definition is as follows

[(l) “input service” means any service, -

(i)    used by a provider of [output service] for providing an output service; or

(ii)   used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

and includes services used in relation to modernisation, 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, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

[but excludes], -

[(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -

(a)      construction or execution of works contract of a building or a civil structure or a part thereof; or

(b)      laying of foundation or making of structures for support of capital goods,

except for the provision of one or more of the specified services; or]

[(B) [services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods; or

[(BA) service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by -

(a)      a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person; or

(b)      an insurance company in respect of a motor vehicle insured or reinsured by such person; or]

(C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;]  

When it is specifically included in inclusive definition, how can they deny during their audit?

Thanks

Venkat

Dear Experts ,

Need your more clarification???? Kindly assist. A manufacturing company is liable to pay service tax under reverse charge mechanism on services received from :-

1. Passanger transport service provider

2. works contract service ( Rennovation of office, AMC services and Man Power supply contract(Man power used to production)

3. professional services - legal services 

4.Rented Cab - used for labour pickup and drop in factory.  

5.GTA (Goods Transport Agency) Service Tax. (Freight inward and outward)

My question is whether such manufacturing concern can  avail input credit on service tax paid under reverse mechanism.

If yes then kindly let me know the sections / rules under which input credit is allowed. 

Kindly list out Cenvat Credit on Service Tax paid.

P.Panneerselvam

 

454

Dear Paneerselvam,

These are the Cenvatable Services;

Manpower 

Legal

GTA

non cenvatable

WCS-Renovation of office

Renta cab service