Cenvat credit of Service Tax

[Asked by Guest]

Sir,

Whether we can take the credit of Service Tax paid on Man Power engaged in different Schools as scavengers as a part of CSR Activity which mandates for a company under The Companies Act 2013.

[Himansu Sekhar]

No , it is mostly welfare activities having no relationship with the business of manufacture. The credit may not be available.

Thank u Sir,

Though it is welfare activity we are not doing it voluntary but only in compliance with the provisions of the Companies Act 2013.

Whenever we are availing credit in respect of Services availed in compliance with The factories Act in a factory and Environmental Act to maintain greenary in a factory, why can't we avail credit in respect of Services availed in compliance with the Companies Act

[Himansu Sekhar]

The eligibility is goverened by the ccr04. The companies act prescribes guidelines for contribution towards social sector. Now almost all activities attract service tax. It is the prerogative of the Govt. To decide the eligibility of credit and the limitations prescribed in the law to be adhered to.

[Nash Industries I Pvt Ltd]

CSR and CCR are two different aspects.

As per CCR, credit of service tax is allowed under three limbs:

1. Used by a manufacturer directly or indirectly in or in relation to manufacture of final products and clearance of final products upto the place of removal

2. Used by provider of output service for providing an output service

3. inclusive services

excludes certain services .

If any one of the condition is satisfied, credit is allowable.

CSR/ Welfare activities does not fall under any of the categories.

Regarding your query regarding other statutes, the courts have held that those services are used directly or indirectly in relation to manufacture of the final products and hence allowed.

Hope this clarifies.

Regards

S.Ramaswamy

[KASTURI SETHI]

I support the views of Sh.S.Ramaswamy Sir.There are case laws on this issue.

[YAGAY and SUN]

On this matter we have a totally different view as mentioned in our earlier reply.

[DR.MARIAPPAN GOVINDARAJAN]

I also endorse the views of Shri Ramasamy

AI Summary

Cenvat credit eligibility for CSR-related services denied if services are not used in or linked to manufacture or output services.
Service tax on manpower engaged for CSR/welfare activities in schools generally does not qualify for Cenvat credit because such services lack the requisite nexus to manufacture or to provision of an output service. Cenvat eligibility is confined to services used directly or indirectly in or in relation to manufacture and clearance up to removal, services used to provide an output service, and specified inclusive services; CSR/welfare activities ordinarily fall outside these permissive limbs unless a direct connection to manufacturing or output service provision is shown.