Input Service credit - Reg

[vinay wakde]

We have taken Input service credit on service catagory namely on Cleaning Service & Pest control service   by our Mumbai office during the period 2009 to 2011. Our Mumbai office has taken Service Tax Registration  under Input Service Distributor (ISD) and transferred the credit to our factory by issuing ISD Invoice.  Kindly let us know whether the credit taken on cleaning & Pest control services is eligible for credit ?  We have been asked  to reverse the credit by the Excise Auditors. Kindly gives your valuable views. 

Regards,

VINAY

 

[YAGAY and SUN]

There is no nexus of  the pest control services which were being provided in the office of the manufacturing unit with the manufacturing activities of manufacturing unit due to having remote location of the office from the factory, hence service tax which was distributed from office will not be legally eligible.  Kindly refer Rule 7of the Cenvat Credit Rule, 2004, as amended time to time along with the definition of the Input Services.

AI Summary

Input service credit denied where services lack nexus with manufacturing and were distributed via ISD.
Cleaning and pest control service tax credit distributed from a Mumbai office to a remote factory via ISD is not legally eligible because the services lack the requisite nexus with the factory's manufacturing activities; eligibility must be assessed under the Cenvat Credit Rules and the definition of Input Services.