Payment of service tax by adjusting credit on input services- reg

[vinay wakde]

We are manufacturer as well as service provider. We have having our owned Barges & Tugs and sometimes we are giving these barges & tugs on hire. We are paying service tax under service category “Supply of Tangible Goods” for output service provided by us. Presently, the CENVAT credit on all input services accumulated during the month is adjusted for payment of Excise duty and we are making e-payment for the service i.e. Supply of tangible goods service, provided by us.

Kindly let us know whether one to one co-relation of CENVAT credit availed on input services towards payment of output service is required?

Whether we have to maintain separate record for receipt & consumption of input services as per Rule 9(6) of CENVAT Credit Rules?

Is there any monthly CENVAT Return other than CENVAT Return under Rule 9(7) of CCR, is required to be filed to the Service Tax authority, if we adjusted the credit taken on input service for payment of service tax on output service?

Regards,

VINAY

[Rajagopalan Ranganathan]

Sir,

Q: 1: -Rule 3 (4) (a) states that CENVAT credit may be utilized for payment of any duty of excise on any final product. therefore no one to one correlation between inputs/input service is required to be establish with output (manufactured final products)/output services.

Q: 2: - Yes.

Q: 3: - No. However you have to furnish the extract of the credit account maintained by you along with periodical return though there is no such prescription either in CCR or service tax rules.

[Ganeshan Kalyani]

Regarding your first query I would like to mention that though one to one correlation is not needed but while setting off service tax credit toward excise duty the service on which credit is availed should have nexus with the output duty. Similarly the input service credit should have nexus with the output service tax payable to claim set off. this is my view.

[KASTURI SETHI]

Cenvat Credit on Service Tax was made effective from 10.9.2004. On 8.7.2004, Finance Minister Sh.P. Chidambaram in his budget speech, inter alia, stated as under:- " I propose to extend credit of Service Tax and Central Excise duty across goods and services." He made credit of Service Tax and Central Excise duty interchangeable.Thus he extended cenvat credit across the board.

[Ganeshan Kalyani]

Thanks Rajagopalan sir and KASTURI sir for your clarifications.

AI Summary

CENVAT credit portability allows input service credit to be used for output tax payment while requiring records and nexus. CENVAT credit may be utilised across duties and services and a strict one to one correlation between input services and outputs is not required; utilisation must, however, have a nexus with the output service or product. Separate records of receipt and consumption of input services are required under the CENVAT rules, and while no separate monthly return to the service tax authority is mandated, an extract of the credit account should be furnished with periodical returns or maintained for compliance.