INPUT SERVICE DISTRIBUTOR

[Anil Jangid]

Dear sir,

IF 'A' IS HEAD OFFICE AND SITUATED IN DELHI AND 'B' IS BRANCH AND SITUATED IN HIMACHAL PRADESH . SIR SUPPOSE HEAD OFFICE 'A' RECEIVED ANY SERVICE . SIR MY QUESTION ONLY THAT CAN BRANCH 'B' TAKE CENVAT CREDIT ON BEHALF OF HEAD OFFICE'A' . SOME NOTES ABOUT ABOVE QUERY 1-HEAD OFFICE 'A' HAVE NO INPUT SERVICE DISTRIBUTOR REGISTRATION 2-SERVICE BILL IN THE NAMED OF BRANCH 'B' ( WHO IS EXCISABLE UNIT)

ANIL JANGID

[DR.MARIAPPAN GOVINDARAJAN]

The head office may avail services for which service tax may be paid by the head office. The credit for the same may be taken by the factory where manufacturing activity is taken up. For this purpose the head office is to register input service distributor with the Department. The input distributor invoice is to be issued for the service tax credit to be distributed to the unit. The invoices should be in the name of the head office. The invoice in the name of excisable unit credit may be taken straight away by the said unit.

[Ganeshan Kalyani]

Yes you can directly send the invoice to your factory and factory can avail the credit.

[Ganeshan Kalyani]

Since invoice is in the name of factory no need for HO to get registered as input service distributor.

[KASTURI SETHI]

I agree with both Sh.Ganeshan Kalyani Sir and Sh.MARIAPPAN GOVINDARAJAN Sir. Actually, this query has two parts.Both the points have been well covered by you in piecemeal and in one go by Sh.Mariappan Govindarajan. I would like to add that in case Head Office intends to pass on input service (on account of service received by HO) to its branch office, HO has to get itself registered as ISD. If HO has so many branches, then Centralized Registration is to be preferred. However, for Centralized Registration, centralised accounting system or centralized billing system is must.

Just for additional information to the questioner.

[G GOSWAMI]

Sir: in this case if a Head Office has only one manufacturing unit (there is no other unit any where) and the cenvat credit for input service is utilised in this manufacturing unit but the Invoice is raised in the name of Head Office/Head Office address- whether ISD Registration is required by the said H.O for availing cenvat creditat their single manufacturing unit. Kindly enlighten us by your kind opinion.

Regards,

G.Goswami

6.1.2016

[KASTURI SETHI]

Sh.G.Goswami Ji,

Sh.Mariappan Govindarajan has already answered to the query in his reply dated 5.1.2016. However, it is again confirmed/clarified that Head Office has to get itself registered as Input Service Distributor and follow the proper procedure laid down in Rule 4 A(1) and (2) of Service Tax Rules, even if Head Office has one manufacturing unit which is already registered. If still not clear, you are welcome again.

[Ganeshan Kalyani]

I agree with Kasturi Sir.

[G GOSWAMI]

But respected Sirs, there are several judicial pronouncement wherein it has been held that if no "distribution" is necessary, there should not be any need of "input Service Distributor". If assessee has only one manufacturing unit, H.O need not be registered and Cenvat credit can be taken at factory even if invoices are with address of Head Office. Under the circumstances we shall be obliged to have your kind opinion considering the judicial pronouncement in this matter. Whether the assessee of single manufacturing unit could take shelter of those judgments for not registering their H.O as ISD since all the services are exclusively used at factory.

Regards,

G.Goswami

8.1.2016

[Ganeshan Kalyani]

As per law Head Office has to registration for Input Service Distributed for distributing service tax credit availed by Head Office. Even though the service would have been used for one manufacturing unit it has to get registration.

[KASTURI SETHI]

Better option has been advised by Sh.Ganeshan Kalyani, Sir.It is legal position. Why to take risk unnecessarily ? Some case laws are pro-assessee and some are pro-revenue. Each case has different circumstances.Moreover, so many changes take place in Service Tax day-to-day.

[G GOSWAMI]

Respected Sirs:

Many many thanks for your wise advice.

Regards,

G.Goswami

9.1.2015

[Ganeshan Kalyani]

Thanks Kasturi Sir for supporting my views.

AI Summary

Branch Office in Himachal Pradesh Can Claim CENVAT Credit if Invoice is in Its Name Without ISD Registration. A discussion on a forum addressed whether a branch office in Himachal Pradesh can claim CENVAT credit on behalf of its head office in Delhi without the head office being registered as an Input Service Distributor (ISD). Participants agreed that if the invoice is in the branch's name, it can directly claim the credit. However, if the head office intends to distribute credit to multiple branches, it must register as an ISD. Some judicial precedents suggest that if only one manufacturing unit exists, ISD registration may not be necessary, but caution is advised to avoid legal risks.