Credit on Advocate services rendered for Closed Office premises in dispute

[Ravinder Guleria]

Dear Sir,

Shall we take service tax credit on Reverse charge paid by us on Advocate services who is rendering Arbitration case against vacate of Office premises 3-4 years back. At that time we had sperate office and factory premises and had seperate Service Tax registrations.  But due to some reasons we have vacated the office and surrendered the registration and shifted to factory itself. We have all the registration, incl. Service Tax, Excise &  other regn. My question is whether we can take credit on these services currently.

[Madhukar N Hiregange]

If you area manufacturer then eligibility would be strong. If service provider then if used in providing output service would have to be established. Maybe difficult.

[YAGAY andSUN]

Dear Iyer,

Though there is no time limit prescribed in the Finance Act, 1994 to avail the CENVAT credit on Input services, but there are certain judgments which enumerate that CENVAT credit should be availed within reasonable time and in some judgments it is determined that 1 to 1.5 years are the reasonable time to avail such credit.

In addition to the above, CENVAT credit should be availed under the provisions of CENVAT credit Rules, 2004 as amended from time to time.  If you can prove the nexus with your manufacturing activities and with output services, then, you may avail the same, otherwise not.

Regards

Team YAGAY & SUN

(Management and Indirect Tax Consultants)

AI Summary

CENVAT credit eligibility hinges on demonstrated nexus to production or output services and timely claim. Claiming input tax credit for advocate services paid under the reverse charge depends on eligibility under the CENVAT regime, demonstration of nexus between the legal services and taxable output activity (stronger for manufacturers), compliance with the CENVAT Credit Rules, and timeliness consistent with judicially recognised reasonableness constraints on delayed claims.