ISD to Jammu & Kashmir

[Ganeshan Kalyani]

Dear Sir,

I would like to discuss on a point where there is a Manufacturing unit in JandK where Excise duty is payable and refund is applied for the same as per Excise scheme. As per Finance Act Service tax is applicable to all the States in India except JandK. I would like to ask the cenvat credit rule is not restricting to avail credit of service tax against excise duty payable in the state of JandK. Whether service tax by way of Input service distribution can be distributed to JandK to avail cenvat credit against excise duty payable.

Kindly through some light in the query sited.

regards,

ganeshan

[DR.MARIAPPAN GOVINDARAJAN]

Jammu Kashmir is in non taxable territory. Therefore no service tax is leviable. CENVATCredit Rules, has been framed by virtue of powersgiven inCentralExciseAct. Therefore, in my opinion you can distribute credit.

[Ganeshan Kalyani]

Dear Sir,

Recently i read a note published by ICAI (The Institute of Chartered Accountants of India) which writes as under :

The CENVAT credit Rules, 2004 extend to the whole of India. However, the provisions of these rules in relation to availment and utilization of credit of service tax do no apply to the State of Jammu and Kashmir as service tax law is not applicable to Jammu and Kashmir. The rules cover all the three categories, namely manufacturers, service providers and manufacturers-cum-service providers.

regards,

ganeshan

AI Summary

CENVAT credit distribution: service tax credit treatment in Jammu and Kashmir hinges on whether service tax law applies. Whether CENVAT credit of service tax can be distributed to a manufacturing unit in Jammu & Kashmir hinges on territorial applicability: Jammu & Kashmir is a non taxable territory for service tax, and while one view permits distribution on the basis that CENVAT Credit Rules are framed under the Central Excise Act, a professional note states that provisions for availment and utilization of service tax credit do not apply to Jammu & Kashmir because service tax law is not applicable there.