Cenvat Credit

[Rajat Jain]

Dear Sir,

Cenvat Credit of service tax paid under reverse charge on legal services can be utilize against liability to pay service tax on renting of immovable property ? we are not output service provider nor manufacturer  

[Brijesh Verma]

You need to check whether legal services availed by you can satisfy the definition of being an "Input Service" for the output Service namely "Renting of Immovable Property"

If yes, definitely you can adjust.

[Rajat Jain]

Thanks for Reply...

Whether legal services availed for proceeding against prospective buyers who default from their sales contracts are satisfy the definition of "Input Service"? whether upto the place of removal applicable in this case ? 

[Vaidyanathan Venkat Raman]

For availing service tax or input credit, one need to be registered either as a manufacturer, dealer or service provider. In the instant case, it seems you are neither a service provider nor a Manufacturer, as such I think credit is not eligible for you. When there is no credit, question of utilization does not arise.

If you are not a output service provider then you are not eligible for CENVAT credit. But you are liable to pay service tax on the services received by you for which reverse charge basis service tax is applicable.

AI Summary

Cenvat credit eligibility: input-service qualification and registration determine use against renting-of-immovable-property tax liability.
Cenvat credit of service tax paid under reverse charge for legal services can be utilized against renting of immovable property only if those legal services qualify as an input service for the renting output service and if the recipient is eligible to take Cenvat credit (e.g., registered as a service provider, manufacturer or dealer). If the recipient is not an output service provider or otherwise ineligible, credit cannot be availed, although service tax remains payable under the reverse charge mechanism.