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

Service station advised to reverse CENVAT credit for non-taxable activities and notify authorities, interest payment suggested. A service station for commercial vehicles and passenger cars raised a query about CENVAT credit and Service Tax. They only declared the turnover for passenger cars in their ST3 return but claimed CENVAT credit on expenses common to both taxable and non-taxable turnovers. During an audit, authorities noted that they should declare the turnover for commercial vehicles and pay Service Tax on the exempted turnover. Two responses advised reversing the CENVAT credit related to non-taxable activities and notifying the department, with one suggesting paying interest from the date of credit availment.