Is Co-relationship required between input service & output service for cenvat purpose ?

[Sumeet Tholle]

Dear Sir,

One of the my client is having hardware trading business and paid service tax on telephone, CA, GTA Bank charges etc service.

Along with this, he has rented one shop having rent ₹ 1lakh pm and collecting and paying Service Tax.

Can he utilize Service Tax paid for CA, Telephone,GTA related with hardware business towards liability of renting services ?

Pl. Guide with details.

Thanks.

Sumeet Tholle

CA

AI Summary

Cenvat credit entitlement requires a demonstrable co-relationship between input services and the taxable output service before credit is allowed.
CENVAT credit is allowable only when input services are used in providing an output service; trading as an exempted activity disqualifies credit on inputs like CA fees, telephone and GTA for meeting liability on renting services. To claim credit against a taxable output such as renting of immovable property, the taxpayer must establish a clear co-relationship between the input services and that taxable output service.