credit availment

[RAMESH ANANTHAKRISHNAN]

We produce nylon monofilament. Our product is fully exempted as per Notification 30/2004. We are paying Service Tax for GTA and other services related to our production. Though the product is exempted from payment of excise duty shall we take credit for the amount paid as service tax and set off the service tax payment paid under GTA?

 Kindly advise.

 

[Surender Gupta]

No, the facility of Cenvat Credit is not available to pay service tax under reverse charge system

[RAMESH ANANTHAKRISHNAN]

Thanks sir.

No sir, My question is not to avail the CENVAT credit on input material. May be I have presented wrongly.

My question is since we are paying service tax to C&F and other services, shall we avail the credit of service tax paid and set off the service tax to be paid for GTA.

Regards

 

A.RAMESH

[Surender Gupta]

As I understand you are required to pay Service Tax on GTA services. Please clarify that are you a service provider or  liable to pay under reverse charge.

[RAMESH ANANTHAKRISHNAN]

No sir. We are not service provider. We are a manufacturer. Since the quantum of service tax  is big , if there is a provision to avail the credit (of service tax) it will be helpful to setoff the amount while we pay the service tax under GTA.

[Surender Gupta]

You are not entitled to take any credit of inputs or input services since you are not manufacturing excisable goods or not providing any taxable services.

However, in case you are in export of goods, than Cenvat Credit may be availed if otherwise eligible.

[krishna murthy]

Mr. Ramesh

Notification No. 30/2004 is a conditional notification and is applicable to you provided, you do not avail cenvat credit on inputs and input services.  As per this notification, your clearance of finished product is exempt subject to you not availing the cenvat credit.  Hence, you cannot avail credit of services tax incurred on any input services.

Regards

[YAGAY andSUN]

CENVAT credti wouldn't be available to you since your final product is exemtped and It also can't be available for paying off the liability of output services i.e. GTA.

[sv bhasker]

Sir,

You can not utilise input service credit to set of payment of service  tax on GTA as the said service under Section 65(105)(zzp) is excluded from the definition of 'output service' defined under Rule 2(p) of Cenvat Credit Rule, 2004 uptill 30.6.2012. It appears that same is the position after the advent of negative list  based services effective from 1.7.2012.

AI Summary

Cenvat credit on input services barred where final product is exempt; cannot set off service tax against GTA liability. Manufacturers clearing goods under an exemption conditioned on non availment of Cenvat credit are barred from taking credit of inputs or input services; therefore service tax paid on input services cannot be claimed as Cenvat nor set off against GTA service tax liabilities, and GTA is treated as excluded from the definition of output service under the Cenvat rules, though export related credit may be available if separately eligible.