One to one correlation - input and output service

[RAJESH MANGAL 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

Cenvat credit can be used across taxable outputs unless the input relates to an exempt service only.
There is no requirement of a one-to-one correlation between credit availed on one output service and tax liability on another; cenvat credit on input services may be used to pay tax on different taxable outputs within the same entity unless the credit arises from inputs or services attributable to an exempt or non-taxable output.