CENVAT for Export of Services

One of my clients has a Software Services Company which provides software services to both domestic as well as international clients.

During the era of Service Tax, the client had taken CENVAT input against their domestic services. The particular Tax inspector is right now claiming that the there is a problem in such input and it might end up in a Tax notice of CENVAT reversal which could amount to upto 7% of the net turnover of the company in the particular year. The net CENVAT input would not exceed beyond an amount of INR 2 L while the 7% turnover would be a very high amount. 

It would be appreciated if anyone can suggest the way forward and what does the Rule imply?

Replies (1)

Dear Sir/Madam,

ITC on input services are to be used for the business for providing the outward services. In your case its purely software services so if the service tax claimed is for the business then they can't deny such credit. however the service tax credit is defined based on below case laws might help u

https://www.cbic.gov.in/htdocs-servicetax/ecs-st/cenvat/cenvat-ecs-cases-idx

regards,

Bhavya.P

 

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