Service tax on feasibility study report by a foreign compnay

[shaji thomas]

A manufacturer in India appoints one consulting firm to conduct the feasibility study to take over a foreign company. The firm submits the due diligence report and charges service tax in their bill. Whether the Indian company is eligible for the input service credit on the above bills raised by the consulting firm or otherwise?

AI Summary

Indian Manufacturer's Input Service Credit Query for Feasibility Study May Require Reversal Under Rule 6. A manufacturer in India engaged a consulting firm to conduct a feasibility study for acquiring a foreign company. The consulting firm submitted a due diligence report and included service tax in their bill. The query was whether the Indian company could claim input service credit for this service tax. The response highlighted two provisions: availing CENVAT credit and exempted operations. Although the payment qualifies for credit as it pertains to business purposes, it is not directly related to manufacturing operations in India and may require reversal under rule 6. The issue remains unresolved in judicial courts.