Input of service tax

first provide nature of input service availed............ then tell u abt ur query

Thank you sir.... here mentioned below my service tax input deatlis

 Service tax input  on Rent, Telephone Charges, Security charges and Courier charges.

 I would like make few words to you about my orgnisation in detail for more clarification. Actually we have show room as usally whare vehicles are being sold and another one workshop where vehicles service, Repair & Recondition and Pre-Delivery charges are being done. So We have to pay service tax on Vehicles Service Charges, Repair & Recondition charges and Pre Deliviery inspection charges. 

My doubt is that can i utlise 100% service tax input on output service tax. But i heard that 100% input serivce tax can't utlised on output service tax. please provide me notification if there is,  regarding this.

Thanking you sir

In this case the authorised dealer is doing Taxable Output Service and Exempted Service (Trading of Goods). Where provider of output service avails of CENVAT credit in respect of any inputs or input services and  provides such output service which are chargeable to tax as well as exempted services, then provider of output service shall maintain separate accounts or pay an amount equal to six per cent of value of the exempted services or pay an amount as determined under sub-rule (3A) of rule 6 of Cenvat Credit Rules,2004 - Please refer rule 6 of CENVAT CREDIT RULES, 2004

My client is a auto mobile service guarage. The guarage was taken on lease @ Rs 1,00,000 per month. The owner of the guarage raises a taxable invoice on my client adding 12.36% on Rs. Lakh towards service tax and my client / tenant pays Rs. 1,12,360/- every month. 

My question no-1:

Whether my client is entitled for an input credit of service tax Rs 12,360 every month ? If yes whether this input credit is allowed to set off against his out service tax liability ?

My client established his guarage in the year 2001 and continuing in the same premises till today. The owner of the guarage raises an taxable invoice during December 2013 for service tax on the amounts of rents paid for period 1/7/2007 to 31/3/2012 which it was not charged earlier during that period. the amount works out to above 4 lakhs and calls for the payment on or before 31/12/2013.

My 2nd question is

if the amount is paid whether input credit is allowed ? if yes whether this credit can be set off against my client's out put tax liabilty for the month december and subsequent months?  

 Please advise me earliest possible

murty mv

For Question No.1 - The Client is entitled for an input credit of service tax for Rs 12,360 every month. The input credit can be used to set off against out service tax liability.

Please see the clarification by board in Circular No. 170/5/2013-ST dated 8 August 2013 Sl.No-18 on availability of cenvat credit on Service Tax Paid on VCES Scheme.

Question- Whether the tax dues amount paid under VCES would be eligible as CENVAT credit to the recipient of service under a supplementary invoice?

Answer - Rule 6(2) of the Service Tax Voluntary Compliance Encouragement Rules, 2013, prescribes that CENVAT credit cannot be utilized for payment of “tax dues” under the Scheme. Except this condition, all issues relating to admissibility of CENVAT credit are to be determined in terms of the provisions of the Cenvat Credit Rules. As regards admissibility of CENVAT credit in situations covered above question attention is invited to rule 9(1)(bb)  respectively of the Cenvat Credit Rules, 2004.

Board has not clearly answered about the admissibility of CENVAT credit for service tax paid under VCES scheme.

Please see the following link for more details. https://www.vcesindia.com/commentary_vces_004.php

Example for Rule 6 of CENVAT Credit Rules, 2004

X Ltd has 2 Divisions-

• Trading of Two wheelers and its spare parts (Exempted Service)
• Repair and Maintenance service (Taxable Service)

Rule 6 of CENVAT Credit Rules, 2004 is applicable to X Ltd. Rule 6 determines the amount of CENVAT credit can be availed or amount of CENVAT need to be reversed.

X Ltd uses three input services.

Additional information needed for determination of CENVAT credit

Total Turnover of X Ltd                                                   - 600,000

Turnover of Division A during the period                           - 5,00,000

Cost of goods sold (Division A)                                       - 3,75,000

Turnover of Division B during the period                           - 1,00,000

X Ltd has three options to determine the CENVAT credit that can be utilized

Option I – Maintain Separate books of accounts of Division A and Division B

Available CENVAT credit for the input services will be – 12,360+1,030* =13,390

*Proportionate based on turnover i.e. 6180*100,000/600,000

Option II – Pay and amount equal to 6% of value of exempted service

Value of exempted service in case of trading, shall be the difference between the sale price and the cost of goods sold or ten per cent of the cost of goods sold, whichever is more.

Value of exempted service will be 1,25,000 (5,00,000 -3,75,000) or 37,500(3,75,000*10%) whichever is more. i.e. 1,25,000

Available CENVAT credit for the input services will be:- 12,360+6,180-7725*=10,815

*6% of value of exempted service i.e. 125000*6.18% (Education Cess Extra)

Option III –  Pay the amount attributable to input services used for the provision of exempted services = (M/N) multiplied by P, where

M denotes total value of exempted services provided during the period,

N denotes total value of taxable and exempted services provided during the period, and

P denotes total CENVAT credit taken on input services during the period;

i.e. 1,25,000*(12360+6180)  = 10,300

         (1,25,000+1,00,000)

Available CENVAT credit for the input services will be:- 12,360+6,180-10300=8,240

Note: The credit of marketing service cannot be allowed in all the three options since the input service is used exclusively for provision of exempted services.