Adjustment of the input service against the liability of output service

[RAJESHMANGAL AGRAWAL]

A Service provider X is registered in consulting Engg service and providing consultancy service. He is entered into a turnkey project whereby he has to supply materials as well as errections & commissioning of it. Till date no regd. made with dept either on Errection Comm. service or work contract service for the turnkey project. in the F.Y. 2008-09 X did not raised any invoice for the output service of Turnkey project whereas he got some input service Invoice for the Turnkey project and adjust it for the tax liability of output service consultancy service. Questions: 1) is it permissible to adjust the Input service credit of Turnkey project against the liability of output service Consultancy service irrespective of the fact that no bill for output service Turnkey Project service (Errection Commissionig service) was raised in 08-09. 2)If the answer above is Yes, than can it be possible to add the Errection service now w.e.f.Mar-09. Prepare the tax liability for Consultancy service & Errection Commissioning service(Nil) seperately and determine the total tax liability and therefrom deducting the total input service credit towards consultancy service and Turnkey project service. Thanks & regards.

AI Summary

Consulting Firm Can Offset Input Service Credit Against Tax Liability Without Specific Correlation Under Cenvat Credit Rules, 2004. A service provider, registered under consulting engineering services, engaged in a turnkey project involving material supply and erection, did not register for erection commissioning or work contract services. In the fiscal year 2008-09, they received input service invoices for the project but did not issue any output service invoices. They inquired about adjusting input service credit from the turnkey project against the consultancy service tax liability. The response clarified that under Cenvat Credit Rules, 2004, specific correlation is not necessary, and credit can be utilized if the input services are eligible, regardless of when the bill is issued.