Department deny for R&D distribute service Tax credit. Challan issued by R&D, as the R&D centre cannot be treated as an office to distribute input service credit.

[Rajan Rajan]

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Dept. deny for R&D distribute Service tax credit. Issue is challan issued by R&D, as the R&D cannot be treated as on office to distribute input service tax credit.

Is it sustainable under ST rule, can we challenge this. please provide  case laws/inputs

[DR.MARIAPPAN GOVINDARAJAN]

Dear Sir,

Research and Development, if it is for the purpose of the improving the quality of goods or upgrading the goods or service, then it is having nexus with the manufacturing of goods or providing output service. As such it may be treated as an office which may distribute credit. Soime case laws are there in this regard. I shall give it within a considerable time.

[Mahir S]

Sir,

Presently CENVAT Credit benefit under CENVAT Credit Rules, 2004 is not available to Capital Goods used for RandD purposes which do not fall under specified Chapter Heading. Further, in regard to Inputs/Capital goods used in R and D units located outside the factory of manufacturer, benefit of CENVAT credit is not available, therefore not eligible as input credit also.

In view of above, department’s contention is true and correct.

AI Summary

Debate on R&D Center's Eligibility to Distribute Service Tax Credit Under CENVAT Credit Rules, 2004 &D The department denied the R&D center's ability to distribute service tax credit, arguing it cannot be treated as an office for distributing input service credit. One response suggests that if R&D activities improve goods or services, they may qualify to distribute credit, with supporting case laws available. Another response clarifies that under CENVAT Credit Rules, 2004, credits for capital goods used in R&D outside the manufacturing facility are not eligible, supporting the department's position. The discussion centers on whether the R&D center can challenge this under service tax rules.