Dear Members,
As per service tax rule we have to pay service tax on 25% value of Transporter bill amount. After deposit this amount we take credit of this amount because our sale is transfer sale to our consignee agent. I have heard that any judgement is come in which we can pay these service tax amount in cenvat credit or service credit. Is it any judgement or rule. Pl. explain.
Thanks
Yes. The issue has been decided, GTA can be paid through Cenvat credit. The departmental specious argument that it is not an output service, and hence required to be paid through cash only has been rejected.
However, from 01.04.08, GTA service has been specifically declared not to be an output service for Cenvat Credit- and the issue is not clear in this context. If you pay GTA by cenvat, objection is certain based on this amendment.
thanks rajesh ji
Dear Vidya,
The P&H high court has decided that the credit till the place of cusotmer would be admissible. This decision is for the earlier defintion.
We have suggested to our clients that even post amendment there is a possibility of credit and have advised them to avail the credit and reverse under protest as the expenditure is related to business and certainly has moire of nexus to the service provided / goods sold than say accounting or audting or share issue.
Warm Regards
now matter is crystal clear, payment of goods transport agency will be made through cash and no input tax credit is admissible.
How the matter has become so clear Suresh?
service tax on GTA is to be paid in cash only. since, there is abatement of 75%.
Well Ajay, merely because there is abatement does not mean service tax payment has to be in cash only and credit cannot be utilised for such payment. There are hundreds of partial exemption, and no such restriction is there at any place.
The fundamental issue is that cenvat credit can be utilised for payment of duty on "output services". The department was claiming earlier that although ST on GTA is paid by the company, it is not an "output service" of the company. Therefore credit cannot be utilised for such payment. This contention was rejected by the Tribunal.
Now, after 2008 budget, there is specific exclusion of GTA from the list of output services under Cenvat Credit Rules. Whether the earlier decision will be applicable after 2008 amendment?
dear Madhukar N Hiregange sir,
as far as my knowledge P & H in Ambuja Cement has not decided about the payment of service tax liability, arising due to availement of services of GTA , through cenvat credit. It has decided that if excise duty has been paid on transport charges and property in goods has not been passed on till the goods reach buyers premises, credit on these goods can be availed. This is still possible. But after 2008 amendment it seems not possible to pay this liability from CENVAT credit.
(Experts from an unpublished paper.)
| Originally posted by :atul gupta | ||
| " | dear Madhukar N Hiregange sir, as far as my knowledge P & H in Ambuja Cement has not decided about the payment of service tax liability, arising due to availement of services of GTA , through cenvat credit. It has decided that if excise duty has been paid on transport charges and property in goods has not been passed on till the goods reach buyers premises, credit on these goods can be availed. This is still possible. But after 2008 amendment it seems not possible to pay this liability from CENVAT credit. |
" |
In my answer I have only talked about the possibility of credit availment.
You are right that the usage of the credits to pay the ST liability does not exist today as credit of input services cannot be utilsed for payment of input services liability.
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