Payment of service tax through cenvat

[Sanjeev Sharma]

A company engaged in the business of wealth management and distribute various financial products to their customers. One of the product is distribution of Mutual Funds wherein they get commission from Asset Management Companies (AMC) which is covered under Business Auxiliary Service and service tax is to be paid by the Service receiver in this case. AMCs while making payment make a deduction of the relevant service tax from commission and pay net amount. Company has various other business segment which are all covered under service tax (viz IPO marketing , Home Loans Distribution etc.). Please clarify the following: 1. Whether company has to include the revenue from Mutual Fund distribution in service tax return? 2. If yes , how to show the service tax paid by the service receiver in service tax return? 3. Company is not liable to Pay service tax on commission earned on Mutual Fund distribution therefore do they need to make any adjustment in the CENVAT credit accumulated during the period in % to the revenue from Mutual Fund as compared to the total revenue. 4. Presently company has huge CENVAT credit is lying in books which remains unutilized at the end of every quarter. Is it somehow possible to take the advantage of this against service tax liability from Mutual Fund Commission Revenue.

AI Summary

Wealth management firm exempt from service tax on mutual fund distribution; cannot claim CENVAT credit for related services. A company involved in wealth management and financial product distribution, including mutual funds, inquires about service tax obligations. The service tax for mutual fund commissions is paid by the Asset Management Companies (AMCs), not the distributor. The company questions whether to include mutual fund revenue in service tax returns and how to handle CENVAT credit. The response clarifies that mutual fund distribution is not taxable for the service provider, so it should not be included in service tax returns. Consequently, the company cannot claim CENVAT credit for services related to mutual fund distribution.