I have a franchise business in which there is input service tax in 10 stores (like we pay telephone bill, maintenance charges, etc. for all 10 stores) and there is output service tax in 5 stores (consignment commission is received for 5 stores, rest 5 stores is on purchase sale agreement so no output service tax). can we adjust the entire input service tax for output service tax? is one to one relation necessary? there is centralised billing system through head office for all.
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Input & Output Service Tax
Replies (4)
There is no one to one relationship necessary for the service tax. But the benefit of the input claim depends on the method of service tax followed by your enterprise (like abatement,composition, etc).
The input services used for providing taxable services are allowed. In addtion services used for the business are also allowed ( where the usage in taxable services is not a condition.) However you can expect denial initially and relief at Tribunal.
Dear Sir
We all are agree with u,that there is no mandatry the same catagry for utilisation of service tax.
so pls give the section details in which this is falling.
Pradeep
At five stores you have trading activity only. Input services at these stores do not qualify for cenvat credit. Input services at consignment stores are eligible for credit. Interstore transfer of credit is possible through Input service distributor mechanism. There is no one to one correlation for utilisation of credit.
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