CENVAT OF SERVICE TAX

[S.C. WADHWA]

A manufacturing company employs secruity guard on contract basis for its factory where manufacturing activities are carried out. Company is required to pay service tax on services of security guards on recepient basis. It discharges excise duty on its products manufactured in factory.

Question is whether company can avail cenvat of service tax so paid on recepient basis against excise duty payable on excisble products manufactured.

[YAGAY andSUN]

Dear S.C.Wadwa,

Eligible, if in relation to manufacture or provision of taxable goods/services, modernization or repairs of factory or office, recruitment, storage, quality control, accounts, sales promotion, financing, computer networking.

Regards,

Team YAGAY and SUN

(Management and Indirect Tax Consultants)

[PAWAN KUMAR]

Dear Sir,

Cenvat credit is eligible on security services provided by the security agencies as per the definition of rule 2(l) of Cenvat Credit Rules, 2004. Read the latest rules in the Central Excise Manual of 2014-15.

[RENGARAJ R.K]

The Cenvat credit on input services viz., security services paid under reverse charge mechanism are eligible input and one can avail the service tax paid by the recipient (company) and also the portion of 25% paid by the service provider.

AI Summary

Manufacturing company eligible for CENVAT credit on security services tax under Cenvat Credit Rules, 2004 for factory operations. A manufacturing company inquires about availing CENVAT credit for service tax paid on security guard services, which are contracted for its factory operations. The company seeks to offset this against excise duty on manufactured products. Responses indicate that CENVAT credit is permissible if the services are related to manufacturing or business operations, as per the Cenvat Credit Rules, 2004. Security services, paid under the reverse charge mechanism, qualify for such credit, allowing the company to utilize the service tax paid by both the recipient and a portion paid by the service provider.