Service tax reversal

[Krishan Gopal]

Sir, we have purchased two machinery from japan and pay cha charges (inward transportation charges)1. one machine return to japan, whether we have to reversed service tax on cha charges or not.2. another machine was capitalized and after that sold it, whether we have to reversed service tax on cha charges or not.Regards, K.Gopal

[YAGAY and SUN]

Dear Krishan Gopal,

Though CENVAT credit Rules, 2004 do not specifically mention about the reversal of CENVAT credit on the Input Services, but it is advisable to reverse the same as Department may litigate this issue.

Regards,

Team YAGAY & SUN

(Management and Indirect Tax Consultants)

AI Summary

CENVAT credit reversal advisable for CHA inward transportation charges when inputs are returned or later sold.
Advisory response: Reversal of CENVAT credit on input services such as Customs House Agent inward transportation charges is not expressly specified in the CENVAT Credit Rules, 2004 for machinery returned to supplier or for capitalized machinery subsequently sold, but reversal is advisable due to administrative and litigation risk where the input service does not support taxable activity.