Utilisation of Cenvat credit against service tax payable on advance receipts-reg

[N Balachandran]

Sir

This is regarding the service tax payable on Advance payment  received.  I need to have the clarification on the following:-

1. Can we adjust the CENVAT credit against the Service tax payable on advance payment received against the taxable services to be rendered.

2  When we render both the taxable and non taxable service ,  my understanding is that,  the service tax paid on input services can be utilised for payment of service tax on taxable services as given below:

a) The input services which is exclusively used for taxable output servicees,  The entire service tax paid on input services are eligible for input credit and the same can be adjusted against the tax payable on output servies.

b) The input services which is exclusively used for non taxable services, the entire service tax paid on input services are not eligible for input credit and the same can not be adjusted against the tax payable on other taxable services

c) The input services which is used as common input services, the service tax paid on the same can be taken proportionately and utilise for the payment of service tax on output services.

Pl clarify, the above is in line with the provisions of service tax rules.

3) I am rendering the following services :

    a) Consultancy services

    b) Erection services

   Discharging the service tax liablity @12.36% from 01.04.2012.

  My question is:

1. The service tax paid on input service ( Consultancy services ) avaiable excess now, Is it possible to adjust the cenvat credit against service tax payable on Erection services

I shall be thankful if you could clarify my question one by one.

Regards

N.Balachandran

 

 

[Yash Goyal]

-Yes you can adjust the cenvat credit against advance received for taxable services.

-Input service may be received for providing any output service. Cenvat credit on it can be used to pay service tax on any taxable service provided. So excess credit of consultancy service can be used for paying service tax on erection services.

 

Regards

Yash Goyal

AI Summary

Cenvat credit use allowed to discharge service tax on advances and to fund tax on other taxable services. CENVAT credit may be adjusted against service tax on advance receipts for taxable services and used to discharge tax on any taxable output service. Credits from input services exclusively used for taxable outputs are fully available; credits for inputs exclusively used for non taxable outputs are not available. For common input services, credit must be apportioned proportionately, and only the attributable portion may be utilised. Thus excess credit from consultancy input services can be applied to erection service tax liabilities, subject to these apportionment rules.