Payment of service tax through cenvat or PLA

[Guest]

We are a manufacturing unit and have surplus of CENVAT credit for more than Rs. 1 cr. this credit has been accumulated on Capital Goods and Raw material as we are in exports also. Now we have provided consultancy service to a unit and we have charged Service Tax of Rs.5 lacs on invoice raised by us. Now question is whether the payable amount of Rs. 5 Lacs can be adjusted against CENVAT Credit available from Manf activities or we should deposit thru PLA.

[Surender Gupta]

Yes, where the manufacturing unit service providing units are same. There is no bar in using the available cenvat credit for making payment of service tax or central excise.

[Guest]

The view express by Mr. Dinesh Gupta appear to be correct. Inter use of cenvat credit is no bar. You can use cenvat credit availed for the purpose of central excise to pay service tax.

AI Summary

CENVAT credit can be used to discharge service tax liability by the same entity; inter-use of credit permitted. Inter-use of CENVAT credit is permitted where the manufacturing unit and the service-providing unit are the same. A manufacturing unit with CENVAT credit accumulated on inputs and capital goods may apply that credit to discharge service tax liability arising from consultancy services supplied by the same unit; there is no prohibition on using CENVAT credit to pay service tax or central excise liabilities.