Input Service Credit on Govt Organisation Invoice

[Asked by Guest]

Dear Sir,

We are a manufacturer ,our employee gone for a training course of a Government organization ( Government of India Ministry of Communications & IT Department of Electronics and Information Technologies ) and they give us invoice with charging the service tax .

So my question is can we take credit as input service of this service tax as this is a government organization.

Regards

Swapneswar Muduli

[Rajagopalan Ranganathan]

Sir,

Before taking credit you have to establish the nexus between the training under gone by your employees and the final product manufactured by you or the output service provided by you. The Cenvat Credit Rules, 2004 do not prohibit taking of credit based on invoice issued by a government organization.

[Mahir S]

Sir,

You can avail input service credit for training course and conducted by Govt. organization,

[KASTURI SETHI]

Since the training has been provided by an institute which is department of Govt. of India. This department falls under the definition of 'GOVERNMENT' as per new definition. Most of the services provided by the Govt. are not liable to Service Tax. I am of the view this institute is not commercial. Sometimes Service Tax is wrongly charged due to lack of knowledge. Pl. ensure that Service Tax has been correctly charged. If wrongly charged by the Service Provider, you cannot take credit.

[ashish chaudhary]

You can take the credit based on the invoice of service provider. You need not to verify the applicability of tax or otherwise at the service provider end. In my view, even if wrongly charged, you shall be entitled to take the credit.

[KASTURI SETHI]

Dear Ashish Chaudhary Ji,

I always welcome Experts' views. I have receptivity to learn from other Experts irrespective of age & experience. Otherwise a person will become stagnant water. I differ with you on the ground that if any assessee whether manufacturer or Service Provider pays Central Excise duty or Service Tax in excess on any ground whatever may be, that is unlawful and thus Cenvat Credit taken on that excess amount of duty or Service Tax is also unlawful. For example ; the rate of Service Tax is 10% adv. and the Service Provider charges 12.%, the recipient of the service will take credit of ST paid @10% and not at the rate of 12%. I Practically also, the department never allows such wrong credit. A manufacturer or Service Provider who pays duty or ST in excess can claim refund and then what will be the fate of the Cenvat Credit passed in excess. It is not possible for the department to keep track on such credit. There are so many examples where the department got the amount of credit reversed which was taken on the basis of goods which did not conform to the definition of 'Manufacturing Process'. So practically, better option is to take precaution while taking credit and thus avoid unnecessary litigation." What is the practice of the department ? " is also crucial. Here it would be pertinent to mention that on the basis of "PRACTICE OF NON-LEVIABILITY OF CE DUTY ON ANY GOODS" the department also grants exemption from CE duty under Section 11 C of the Central Excise Act.

So I mean to say what is practically possible or convenient for the assessee is also to be taken care of.

Your views are always welcome.

AI Summary

Input service credit: training charged by a government body may be creditable if nexus exists and tax is levied.
Whether service tax on training charged by a government organization is creditable hinges on establishing nexus to the manufacture or output service; Cenvat Credit Rules do not forbid credit on government invoices but recipients must verify that the tax was lawfully leviable. Views diverge on wrongly charged tax: some allow invoice-based credit, others treat credit on unlawfully or excess tax as impermissible and point to refund as the proper remedy, while departmental practice may result in disallowance of excess credit.