Distribution of service tax credit - corporate office

[pardeep bisht]

A company have a manufacturing unit as well as dealer also,the corporate office of the same is registered as input service distributer and distribute all the service tax credit to their manufacturing unit (either services related to manufacturing unit or dealer branch), the auditor has object that the corporate office only distribute that service tax credit which is related to manufacturing unit , please clear is its ok otherwise provide the related case law or circular if any

[Rama Krishana]

Can u avail the cenvat credit in the guise of Input Service Distributor (ISD) in relation to activities which are not chargeable to tax? The answer is no unless specifically provided (like rule 6(5)). Therefore the view of the Audit Party appears to be correct. But, if corrosponding reversal is made by the manufacturing unit, you can show to them and satisfy their query.

AI Summary

Corporate Office's Service Tax Credit Limited to Manufacturing Unit; Reversal Can Address Audit Concerns A company with a manufacturing unit and dealership has a corporate office registered as an Input Service Distributor (ISD) to distribute service tax credit. An auditor objected, stating that the corporate office should only distribute credits related to the manufacturing unit. A response clarified that service tax credit cannot be availed for non-taxable activities unless specifically allowed, supporting the auditor's view. However, if the manufacturing unit makes a corresponding reversal, this can be demonstrated to address the auditor's concerns.