We pay service tax under reverse charge mechanism through cash payment in pls account. Not the service tax which we paid under reverse charge on manpower recruitment is availed as input credit for adjustment with excise and service tax. Now we receive service tax on rent we charge with party so. that is our liability.
can we set of input service tax with service tax liability under any head or stc.
Dear Manish,
Given that there is a service income in the form of rent on which Service Tax is charged and there is Service Tax paid under reverse charge under the head "Manpower recruitment service". Please revert if the facts are different.
Considering the above, you want to set off your Service Tax liabiliy arising out of Rental income, with the Service Tax paid under reverse charge.
Please note that for a service to be considered as input service under Rule 2(l) of Cenvat Credit Rules, there should be nexus or connection of that service with the final output service. Hence, in the present situation, your final output service is providing premises on rent, for which manpower recruitment does not appear to be in connection with the same. Hence, the same cannot be availed unless it is shown that the manpower are deployed directly for the upkeep of the premises given on rent, in which case, it may fall under Maintenance service, depending on the nature of agreement.
In case input credit on any other services are proposed to be availed, please verify the nexus as stated above, before availing the same.
CAclubindia
