GTA & CONSULTING ENGINNERS PAYMENT ADJUSTMENT AGAINST CENVAT

Ideally, for Cenvat Credit on Inputs which is availed by the concern, the set off against output services is only possible if the activity on which input credit has been availed substantially contributes and is an essential part of the output activity.

In your case , am assuming, they've sent a show cause notice on the basis of the fact that the services on which input credit has been taken are not directly in consonance with the output service (GTA and Consulting Engineer) . Had you taken input credit on say excise paid on trucks bought for providing goods transport services, then in that case, you could have availed the setoff owing to the fact that the input activity is related to output.

This is just a contention, the text of the show cause notice however is more important in forming a view as to why the department is not allowing you to take input credit.
 

Dear Sir

FROM THE ACCUMULATED SERVICE TAX CENVAT CREDIT BALANCE ONLY( FOR THE PERIODS 2004-2005,2005-2006-2007,2007-2008) TILL TODAY WE ARE ADJUSTING CONSULTING ENGINEERS PAYMENT. GTA SERVICE TAX PAYMENT AFTER ABATEMENT ADJUSTED THROUGH SERVICE TAX CENVAT CREDIT UPTO 2007-2008 ONLY. FROM APRIL 2008 ONWARDS PAYING BY CASH. FROM APRIL 2008 WARDS ALL SERVICE TAX CENVAT WE ARE USING ONLY FOR EXCISE DUTY PAYMENT ON FINISHED GOODS.

Please tell dept. SCN correct or not?

 

Satish