telephone bill And other service tax bill

[Guest]

Dear  Khatri sir

We are manufacturing machinery for pharmaceutical product and take excise registration in april2012, service tax registration will be registration next month.  My question is can we take service tax credit on telephone  bills and other service purchase in RG 23 part II for utilisation of final product?..

Please guide.

Regards

Manoj Raut

[YAGAY andSUN]

Dear Manoj,

Please check the definition of input services and if services received by you, are in relation with, directly or indirectly manufacturing of dutiable finished goods or taxable output services, then, you can avail the CENVAT credit on Input Services after the date of getting the registration Certificate from the Service Tax Department.

Regards,

Pradeep Khatri

[CA Rachit Agarwal]

Please note that the definition of "input service" has been changed in the Finance Act, 2011. Word "business" has been removed from the definition of input service. Earlier all the input services related to business was allowed as the cenvat credit and the sames was confirmed by vari ous Suprem Court rulings such as Ultra Tech Cement.

However after the amendment it is not advisable to avail cenvat credit on inputs such as telephone bills until unless it could be justified that the final product/ouput service has utilized the such inputs during the course of performance.

[rajkumar shukla]

Registration under service tax law is not required for availing cenvat credit. it may be required for paymant of service tax

AI Summary

Cenvat credit eligibility: telephone and other service bills qualify only if tied to manufacture or taxable outputs and justified. Eligibility to claim CENVAT credit on telephone and other service bills requires that such services qualify as input service with a direct or indirect nexus to manufacturing dutiable finished goods or taxable output services; the Finance Act, 2011 narrowed the definition by removing 'business,' and credit is to be claimed after obtaining the service tax registration certificate, subject to demonstrable utilisation in production or output.