Reversal of Service tax credit on sale of raw material

[Harishanker Patel]

Whether service tax credit taken on GTA, Chargo handling & Business auxiliary service for procuring the Iron ore (raw material for sponge iron manufactrer) is required to reverse on sale of of some Iron Ore.

AI Summary

Debate on Reversal of Service Tax Credit for Iron Ore under Rule 6 of Cenvat Credit Rule, 2004. A discussion on whether service tax credit on services like GTA, cargo handling, and business auxiliary services for procuring iron ore needs to be reversed upon selling the ore. One party argues that Rule 6 of the Cenvat Credit Rule, 2004 requires reversal if iron ore is sold, but not if iron ore fines are generated during manufacturing. Others cite various CESTAT rulings stating that input services do not require reversal upon removal, as services cannot be stored or removed 'as such.' The issue is contentious due to differing interpretations and audit objections. Participants seek clarification on whether the activity constitutes trading or clearance.