cenvat credit allowed on input services

[bhagyashree sathe]

In case of the partnership firm, some of the bills for input services such as mobile, vehicle maintenance etc are in name of the partners.  As per Income tax law, these are treated as businsess expenditure.

So in our view, these bills for services should be allowed for cenvat credit.

Is there any caselaw to strengthen this view?  Any article or experience or opinion is welcome on this.

[Mahir S]

Rule 9(5) of  Cenvat Credit Rule, 2004 reads as under :-

The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant information regarding the value, duty paid, CENVAT credit taken and utilized, the person from whom the input or capital goods have been procured is recorded and the burden of proof regarding the admissibility of the CENVAT credit shall lie upon the manufacturer or provider of output service taking such credit.

From above, it is clear that credit can be availed and utilized either by the manufacturer of final products or the provider of Output Service..In your case, the Partners are not registered persons but their firm is registered with Service Tax Department,  hence service tax credit can be availed only on such Invoices/Bill that are issued in the name of the firms which are registered with the service tax department.

It is also to clarify that such Bills which are issued in the name of Partners are already eligible to be treated as Busiess Expenses for their Partnership Firms under the IT Act, hence Government cannot allow dual benefit of availing cenvat credit under Service Tax and also claiming deduction as Business Expenditure under Income Tax.

[rajkumar shukla]

IS There is rule in Cenvat Credit Rules which prohibits availment of cenvat credit  in case expenses incurred for receiving services is allowable as business expenditure under IT Act. Kindly elaborate.

AI Summary

Cenvat credit eligibility: invoices must be in registered firm's name under service tax; dual benefit not permitted. Cenvat credit may be claimed only by the registered taxable person for input services when procurement and invoices are in the name of that registered entity; the claimant bears the burden of proof by maintaining records of receipt, consumption and duty paid. Invoices issued in individual partners' names do not automatically entitle the partnership firm to cenvat credit and such bills are treated as business expenditure for income tax, so duplicate benefit is not appropriate.