CENVAT ADJUSTMENT

[S SHANMUGASUNDARAM]

WE ARE AUTHORISED SERVICE STATION FOR COMMERCIAL VEHICLES AND ALSO FOR PASSENGER CARS. WHILE FILING THE ST3 RETURN WE HAVE DECLARED ONLY TURNOVER PERTAINING TO PASSENGER CARS. WHILE AVAILING THE CENVAT CREDIT WE HAVE TAKEN TELEPHONE EXPENSES, AUDIT FEES, COMPUTER MAINTANCE & BILL FROM AN AGENCY WHO SUPPLIES MANPOWER FOR OUR COMPANY. DURING THE AUDIT SERVICE TAX AUTHORITIES RAISING THE FOLLOWING POINTS. 1.IN THE ST3 RETURN WE MUST DECLARE THE TURNOVER OF COMMERCIAL VEHICLE ALSO. 2.SINCE, WE ARE AVAILED THE CENVAT CREDIT ON EXPENSES WHICH IS COMMON FOR BOTH TAXABLE & NON TAXABLE TURNOVER, WE HAVE TO PAY THE SERVICE TAX ON THE EXEMPTED TURNOVER ALSO i.e (TURNOVER OF COMMERCIAL VEHICLE)ON THE RATE PRESCRIBED IN RULE 6 WE WOULD LIKE TO KNOW WHAT IS OUR LIABILITY IN THIS CIRCUMTANCES AS PER LAW. KINDLY ADVICE.

[CA Rachit Agarwal]

We are not required to pay Service Tax on the Exempted Turnover.

Cenvat Credit utilized for the exempted turnover/chargeable turnover can be revered and paid to the service tax authority with the interest from the date of availment of Cenvat Credit.

[Surender Gupta]

The best way is that you should reverse the cenvat credit correspondent to non taxable activity and intimate the department. 

AI Summary

Cenvat credit reversal required where common inputs support exempt services; reverse credit, remit with interest and notify authorities. Service provider declared only taxable passenger car turnover but availed CENVAT credit on common inputs while also servicing exempt commercial vehicles. CENVAT credit attributable to exempt/non taxable turnover must be reversed proportionately; the reversed credit should be remitted with interest from date of availment and the department notified. No separate service tax is required to be paid on the exempted turnover itself.