SERVICE TAX REFUND

[SNEHAL SHAH]

sir ,

We are taxtile mfg co and our plant located at HARIDWAR & which is exempted excise duty , but Service tax GTA we are pay . So Input tax credit will be accumulated .

How we are utilise this accumulated cenvat credit .

Please give your expert advise on this .

SACHIN

 

 

[abhi parakh]

Dear Mr. Sachin

This prima facie does not appear to get through. However, a divergent view as to tax planning &/or logistic re-engineering may be developed. For that purpose it would be imperative to snap through the following details - 

(a)Value of services received annually from the output service provider(s)

(b)Ancilliary sister concerns if any

Regards,

CA Abhi Parakh

[DEV KUMAR KOTHARI]

When the unit is exempt on output tax, there will generally be no CENVAT credit, this is becasue basic principal of CENVAT is to do away with cascading effect on tax or duty on inputs when output is taxable.

 

However, as pointed out by Mr. sachin there can be some financial planning (not necessarily tax planning) to maximise PAT. For that  purpsoe the other unit should be a unit owned by the same manufacturer (and not sister concern)  and other conditions should also be favorably in place.

[NEERAJ KUMAR, RANCHI]

Your query is a litlle clumsy. If you are not paying excise duty so you are not taking cenvat credit as well. Now you are paying s.tax on GTA as a recipients of service, so how the tax credit will be accumulated is now understood, However you can refer to input service credit distributor provisions,

[SNEHAL SHAH]

Dear Niraj ,

We have not ISD Registration & we are mfg. unit , we pay GTA input and out put Material transportation expense , so accumulated service tax is Input -- GTA payment , which service tax credit we are availing every month .

As per my knowledge HO will take ISD Registration and distribute crdit but in this case mfg unit & exemted in excise duty only not service tax . Hope you are cleare , pl. suggest in this case .

Regards,

SACHIN

 

[r.rajkumar kumar]

wnen the location is exempted from duty , input credit canot avail.

AI Summary

Cenvat credit utilisation constrained where output is exempt; ISD or intra unit taxable nexus may enable lawful allocation.
A textile manufacturer at an excise exempt location pays service tax on GTA services but cannot generally utilise accumulated CENVAT credit where output is exempt. Credit utilisation may be feasible if another unit of the same manufacturer produces taxable output and conditions for Input Service Distributor distribution or inter unit credit allocation are satisfied; factual details and proper registrations are required.