Input service credit and trading activity

[shaji thomas]

Dealer registered under Central Excise engaged in imports is also registered under S.Tax and providing output service under the category of Business Auxiliary Service( local market exploration ) and have avialed input service credit on CHA Service and other import realted services and discharged the service tax liabilty from the credit so earned. Whether he is eligible to avail such credit and the services can be considered as input services or otherwise?

[CA Rachit Agarwal]

Business Auxilliary Service being the output service.

As the CHA service coming under the definition of Input Service of Rule 2(l) and the CHA services is being used  for providing the output service hence the Cenvat Credit can be availed pursuant to Cenvat Credit Rules, 2004

[Radha Arun]

It seems to me that CHA service is not connected with the output service of local market exploration, and therefore the credit would not be available. (The definition of input service is 'service used for providing output service'.)

AI Summary

Debate on CHA Services as Input Services Under Rule 2(l) of Cenvat Credit Rules, 2004: Credit Eligibility Questioned A dealer registered under Central Excise and Service Tax, engaged in imports and providing Business Auxiliary Services, inquired about the eligibility to avail input service credit on CHA services and other import-related services. One respondent, CA Rachit Agarwal, stated that CHA services qualify as input services under Rule 2(l) of the Cenvat Credit Rules, 2004, allowing credit. Another respondent, Radha Arun, disagreed, arguing that CHA services are not related to the output service of local market exploration, thus disqualifying them from credit eligibility.