One to one correlation - input and output service

[RAJESHMANGAL AGRAWAL]

One service provider X is registered in two output service “A” and “B” . Suppose tax liability on output Service A is Rs.10000/- but no Cenvat credit available against output service ‘A”. Similarly Suppose tax liability on output Service B is Rs.Nil but Cenvat credit available against output service ‘B” is Rs.4000/- Whether X can adjust the Cenvat credit of Rs. 4000/- availed on output service ‘B” against the tax liability of Rs. 10000/- arose on output service “A” and pay balance amount of Rs. 6000/- or Whether X has to pay Rs. 10000/- tax liability as occurred against output service “A” and carry forward the Cenvat credit of Rs. 4000/- occurred against service “B” and adjust it only from tax liability of output service “B” only. i.e. for adjustment of Cenvat credit one to one relation service wise is necessary and Cenvat credit can be claimed against that output service against which the same has been occurred. Thanks & Regards

AI Summary

Service Provider Can Offset Service A Liability with Service B Cenvat Credit, Unless Service B is Exempt. A service provider, X, registered for two output services, A and B, faces a query about utilizing Cenvat credit. Service A has a tax liability of Rs. 10,000 with no Cenvat credit, while Service B has no tax liability but a Cenvat credit of Rs. 4,000. The question is whether X can use the credit from Service B to offset the liability of Service A. Responses indicate that one-to-one correlation is unnecessary, allowing credit from Service B to offset Service A's liability unless Service B is exempt. The principle of Input Service Distributor supports this approach.