Utilisation of Cenvat Credit

[kiran pai]

Dear Sirs,

We are the manufacturer of textile fabrics  having manufacturing unit at Silvassa and registered office at Mumbai. We had some let out property in Mumbai and around Maharashtra.  We have opted for  centralised registration certificate of Service Tax for GTA and Renting of Immovable Property service.  Now our queiry is,  can we avail the cenvat credit from the input credit and input service credit.  If yes shall we utilise the said cenvat credit for the payment of Service Tax on the Renting of Immovable property service for the concerned month.  Please reply me.

Thanks,

Kiran Pai. 

[YAGAY andSUN]

Dear Kiran,

You can avail the CENVAT credit or through ISD you can distribute it to the dutiable manufacturing units .  Service Tax pertaining to outward GTA is required to be paid in cash.  No adjustment is allowed via CENVAT credit account.  CENVAT credit  paid on input taxable service i.e. on Renting of immovable property service can be  utilized for payment of output liability.

Since the definition of the Inputs,Input Service and Capital goods have been amended w.e.f. April'2011, therefore, you should be extra Conscious while availing CENVAT credit especially on Input services.  Even wrong availment will be treated at par with wrong utilization and interest & penalty will be levied/imposed on your company.

Best Regards,

 

Pradeep Khatri

 

AI Summary

Cenvat credit: input service credit may fund output service tax, but GTA service tax requires cash payment. Manufacturer with centralised service-tax registration can avail CENVAT credit on inputs and input services and distribute such credit via an Input Service Distributor to manufacturing units. Service tax on outward GTA services must be paid in cash and cannot be adjusted from the CENVAT account. CENVAT credit on renting of immovable property (an input taxable service) may be used to discharge output service tax liabilities. Amendments to definitions effective April 2011 increase the risk of interest and penalties for wrong availment or utilisation.