If No Service Tax Credit is addmissible for the Input Service Services that is used excusively used for Providing the Exepmted Output Serivce as per the Rule 6 (1) of Cenvat Credit Rules, 2004
"6. Obligation of a manufacturer or producer of final products and a provider of taxable service
(1) The CENVAT credit shall not be allowed on such quantity of input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services] except in the circumstances mentioned in sub-rule (2)."
In future, If you are providing the Taxable Service i.e. service within India, and you wish to take the Credit of Service Tax on Input Services, above said Rule 6(1) will not be applicable for you.
As per the Rule 6(2) of CCR 2004
"[(2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for-
(a) the receipt, consumption and inventory of inputs used-
(i) in or in relation to the manufacture of exempted goods;
(ii) in or in relation to the manufacture of dutiable final products excluding exempted goods;
(iii) for the provision of exempted services;
(iv) for the provision of output services excluding exempted services; and
(b) the receipt and use of input services-
(i) in or in relation to the manufacture of exempted goods and their clearance upto the place of removal;
(ii) in or in relation to the manufacture of dutiable final products, excluding exempted goods, and their clearance upto the place of removal;
(iii) for the provision of exempted services; and
(iv) for the provision of output services excluding exempted services, and shall take CENVAT credit only on inputs under sub-clauses (ii) and (iv) of clause (a) and input services under sub-clauses (ii) and (iv) of clause (b).]
If you are unable to make the Saperate records of Receipt & Consumtion of Input Service, Rule 6(3) will come in Role.
As per the Rule 6(3) of CCR, 2004
"(3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow 13[any one] of the following options, as applicable to him, namely:-
14 [(i) pay an amount equal to five per cent. of value of the exempted goods and exempted services; or
(ii) pay an amount as determined under sub-rule (3A); or
(iii) maintain separate accounts for the receipt, consumption and inventory of inputs as provided for in clause (a) of sub-rule (2), take CENVAT credit only on inputs under subclauses (ii) and (iv) of said clause (a) and pay an amount as determined under sub-rule (3A) in respect of input services. The provisions of sub-clauses (i) and (ii) of clause (b) and subclauses (i) and (ii) of clause (c) of sub-rule (3A) shall not apply for such payment: "
It depends on the Assessee which option he wants to take.
CAclubindia
