Service Tax - Cenvat credit on service tax paid on financial & technical audit fee

[MohanLal tiwari]

Dear Experts,

We have availed cenevat crdit of Service tax charged in bills of financial audits as well as technical audit fee but during the audit, the concerned authority has raised objection on the ground that the cenevat will be available on financial audits.

Kindly advise your views quoting the relevant rules.

[KASTURI SETHI]

Dear Querist,

How can you prove that it was your input service ? How it was utilized in providing output service ? Pl. reply

[Ganeshan Kalyani]

The nexus of input service and output need to be established to be able to take the credit. Perhaps the credit denied may have been utilised toward exempt service. It is my wild guess. You need to check at your end.

[MohanLal tiwari]

The subject audit fee and service tax paid thereon was towards stock audit of input / semi-finished / finished goods as well audit of books of accounts which is statuary requirement and needs to be furnished to various Govt agencies as required in company law and bankers.

Since there is no production & supply of exempted goods, question does not arise for using the services towards exempted goods.

AI Summary

Cenvat credit on audit services requires demonstrable nexus to taxable output; absence of nexus can justify credit denial.
Cenvat credit on service tax for financial and technical audit fees requires establishing that such audit services were input services utilised in providing taxable output; without demonstrable nexus or where the services are applied to exempted outputs, the credit may be disallowed.