CREDIT OF SERVICE TAX PAID

[Guest]

We are a manufacturing unit . we are registered with Excise and Service tax both. we are taking CENVAT credit of Excise duty on input received.

we are paying service tax in cash on freight of input  which we had paid after abatement of 75%.my queries are

1.can we debit (pay)service tax from Ex.duty CENVAT.

2.can we take credit of service tax paid by us on Telephone/Mobile Bill,on Bill of various Auditfees/cosultancy fees/professional fees etc.

[YAGAY andSUN]

Dear Sir,

Replies to your queries:

1. Yes, you can adjust the output service tax from the CENVAT credit availed on Inputs.
2. Yes, you can avail the CENVAT credit on Telephone, Mobile phones, Audit fess, consultancy services and professional fees etc as it is specifically mentioned in the definition of the Input services.

Best Regards,

Pradeep Khatri

YAGAY & SUN (Management and Indirect Tax Consultants), Mobile: 9818131923, e-mail: [email protected]; [email protected]

 

[R MUTHURAJ]

Dear Sir,

Reply given by Mr.Pradeep is correct except the point no.1 for the following reason:

In respect of service tax liability arises on Reverse charge basis, it has to be discharged ONLY by PLA/Cash as per the Explanation to the Rule 3(4) of  Cenvat Credit Rule, 2004

Regards,

R.Muthuraj

[Guest]

Thanks Mr.R.Muthuraj.

AI Summary

Cenvat credit eligibility for input services allows adjustment of output service tax, but reverse charge liabilities require PLA/cash payment. Cenvat credit on service tax may be availed for eligible input services including telephone, mobile, audit, consultancy and professional fees and used to adjust output service tax; however, liabilities under the reverse charge mechanism must be discharged by payment from cash or the PLA and cannot be paid by debiting Cenvat credit, per the Explanation to Rule 3(4) of the Cenvat Credit Rules, 2004.