LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Service tax input on freight

Gangatharan (Partner) (108 Points)

14 June 2014

Dear all,

A company is paying ST RCM on freight( both inward and outward), and car hire charges RCM also.

But the company is not providing any output services. and the company is applicable for excise duty.

Can i adjust that input tax credit against my excise duty payable??

Your suddestion will be appreciated.

Thanks in advance...

Reply
Follow
Share

13 Replies

aishwarya s raghavan (student) (224 Points)
Replied 14 June 2014

Dear Gangatharan,

First of all, service tax paid on GTA and Car hire services under RCM is not eligible input credit, even for adjustment against service tax liability. So, I think the question of adjusting it against the excise duty payable doesn't arise. Hope it's clarified.

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 14 June 2014

Yes, you can availed the input tax credit and same is also utilized the further payment of excise duty or service tax exclude RCN. And output service i.e. sale materials send by you through by transport or any kind of.

So there is no question for availment of input tax credit.

JAINENDRA JAIN (ACS/CA) (1668 Points)
Replied 14 June 2014

cenvet credit cannot be utilised for payment of service tax under reverse charge mechanism.

however tax paid on reverse charge can be utilised as cenvet credit for being set off with output tax payable

Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 14 June 2014

Sir, Ms. Aishwarya & Mr. Jainendra, plz provided the same clarifications in this regard as soon as possible because denied by you Cenvat Credit Availment under RCM on GTA service. Further requested to you your earlier action in this regard would be highly appreciated. Hope you got my thing if you having some observations in this regard plz forward the same.

JAINENDRA JAIN (ACS/CA) (1668 Points)
Replied 14 June 2014

Yes you can avail credit or else you can claim refund of rcm tax paid. Wait for the other s to reply

Gangatharan (Partner) (108 Points)
Replied 14 June 2014

Yeah leave about car hire charges..

but for freight inward we can avail input tax credit. no issue on that.

so can i use that ST paid amount to discharge my excise liabilty.

and give some clarity regarding input tax credit on freight outward.

Thank u.

Arun Kumar Singh (GST Advocate) (15188 Points)
Replied 14 June 2014

If input services are used in the manufacturing of final produts then you are eligible to take cenvat credit but you can not avail the cenvat credit of renting of cab. Outward transportation upto the place of removal is eligible. You can pay the excise duty from inputs, input services and capital goods used in the final product.

Gangatharan (Partner) (108 Points)
Replied 14 June 2014

Outward transportation upto the place of removal is eligible.

what is meant by place of removal sir??

so i can take ST on freight outward/inward as my input for excise duty payment??

JAINENDRA JAIN (ACS/CA) (1668 Points)
Replied 14 June 2014

Place of removal covers transportation cost incurred upto factory gate.

Arif Ali (Apt Co Advisory) (1230 Points)
Replied 15 June 2014

yes service tax paid under reverse charge mechanism can be utilised as cenvat credit for excise duty liability

ajay garg (Service) (74 Points)
Replied 15 June 2014

For inward transportation, under reverse charge,deposit the st under gta and availed input st crdit and utilize the same on payment of excise duty. For outward transportation: 1. if it is upto depot then deposit the st as aboveand availed input st credit. 2. Upto consignee premises, if deliver responsiability fall under u then avail the st input credit otherwise no.

Gangatharan (Partner) (108 Points)
Replied 16 June 2014

Thank you all....

Venkatanarayana GM (Partner associate at Hiregange & Associates) (1279 Points)
Replied 16 June 2014

Yes. You can utilize input service for making excise duty payment by way of CCR 2004.

Further, with regard to GTA inward you have to pay and avail credit and use it for making payment of excise duty.

Availing credit of GTA is litigatable , if client is very aggressive you can otherwise better not to avail.

ST payment made for the services received as a Rent - a - cab service, credit cannot be taken as the same is in exclusion clause as per Input service definition as per CCR 2004.

1 Like