INPUT SERVICE PROVIDER

[SNEHAL SHAH]

Sir,

Our head office at Mumbai Andheri and we are registered with Input Service provider . There is 5 Group of company and all major expense and purchase amount will be paid through head office , so we are take cenvat credit ( Service tax ) under ISD registration and month end we are bifercate all plant through Invoice ( head office invoice ) as per Profit margin of all plant . But some confusion is that is it forward all cenvate credit before file ST-3 Return OR There is no any relation with cenvate bifurcation or ST-3 Submission of ISD .

PLEASE GIVE CLARITY ABOUT THIS .

Thanks .

SACHIN

[YAGAY and SUN]

It is advisable to distribute Input services before filing of ST-3 return to the manufacturing units which are manufacturing dutiable final products.

[Dilip Darji]

Dear Sirs.

There is no such law that you need to pass on CENVAT Credit to your manufacturing Plant only before filing of ST-3 Return. You need to pass on within a reasonable time. You can pass on CENVAT credit to your manufacturing Plant, equivalent to the credit availed by you.You cannot transfer to your plant anything more than what you have availed. If manufacturing Plants are manufacturing excisable goods, they shall be entitled to CENVAT credit.

[YAGAY and SUN]

Kindly check the Rule 7 and 7A of the CENVAT credit Rules,2004 as amended time to time in this regard. 

[Dilip Darji]

Dear Sir.

Rule 7 of CENVAT Credit Rules, 2004, speaks about manner of distribution of credit by ISD.(a) distributed credit should not exceed the amount of service tax credit availed by ISD (b) ISD cannot distribute Credit to the units exclusively enganged in providing exempted Service or exclusively manufacturing exempted goods.

Rule 7A of CENVAT Credit Rules, 2004, speaks about distribution credit by ISD.

That none of the above rule, prscribes any such condition that ISD is required to distribute credit before filing periodical ST-3 Return.

AI Summary

Input service distribution: ISD need not allocate CENVAT credit before filing returns; distribute within reasonable time.
Input service distribution under Rules 7 and 7A requires that distributed credit not exceed credit availed by the ISD, must not be given to units exclusively engaged in exempted services or manufacturing exempted goods, and entitles units manufacturing dutiable excisable goods to receive credit; the rules do not mandate distribution prior to filing the periodical return, but allocation should occur within a reasonable time and respecting eligibility limits.